Show HN: Venture Dealr – Visualize and turn the knobs on VC financing concepts

Re:Show HN: Venture Dealr – Visualize and turn the knobs on ... by floatrock on Wednesday October 07, 2015 @11:21PM (#10350752)

Thanks for the clarification, something I'll have to add.

Out of curiosity, how does it work across multiple rounds? I implemented 1x participatory preferences as a simple lifo queue... For non-participatory preferences, are there any complications in calculating the "everybody goes equal from here up" point (50 in the above example) when everyone got in at a different round? Can you have some participatory preferences mixed with non-participatory ones? Is there a good reference for that (at least for a typical case)? Or is this a "call your lawyer" thing?

[ Parent | on HN ]

Re:Show HN: Venture Dealr – Visualize and turn the knobs on ... by SeoxyS on Thursday October 08, 2015 @01:20AM (#10351037)

A preference is just a term on the investment. They could be mixed. It can get pretty complicated.

Take this scenario: (A) Series A non-participating 5M, (B) Series B non-participating 10M, (C) Series C participating 10M, owns 25%. Founders own 50%, no options pool. Company sells for 30M.

    - C gets 10M first
    - B gets 10M next
    - A gets 5M next
    - 5M left over, only C is participating; A & B are just floors.
    - Pro-rata, remaining ownerships ratio of 50:25 = 2:1.
    - 5M/3*2 = 3.33M goes to founders.
    - 5M/3*1 = 1.67M goes to Series C investors.

Total tallies:

    - Founder:  3.33M.
    - Series A: 5M.     ROI: 0%
    - Series B: 10M.    ROI: 0%
    - Series C: 11.67M. ROI: 16%

This is mostly for intellectual curiosity, though. If you're a startup founder today… just don't take on any investors who ask for participating preferred. If you're an investor, don't ask for it, it makes you a vulture.

[ Parent | on HN ]