Converting Investor into a Priced Round

Posted by gc2350 on Wednesday November 02, 2022 @06:07PM
from the self-post dept.

I have an investor that agreed to write a ticket of 150k at a certain val - lets call it 6 mill.

Now i've got an investor that will lead a priced round at 30 mill.

The first investor is strategic and we really need him onboard

DO i add the investor to the priced round term sheet, and just give him shares (based on the lower val)?

OR sign a term sheet at 6 mill val, right before the 30 mill valuation priced round?

Or issue him a SAFE that will convert when we sign the term sheet with the 30m val lead ?

( 8 comments | 2 points | on HN )

Re:Converting Investor into a Priced Round by gc2350 on Wednesday November 02, 2022 @06:08PM (#33443600)

Looking for any advice on how to best get the ticket from this investor without pissing off the lead

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Re:Converting Investor into a Priced Round by HWR_14 on Wednesday November 02, 2022 @07:30PM (#33444323)

If it's a strategic investor who is getting 2.5%, would he be open to joining at the 30 MM valuation for 0.5% and getting 2% in advisory shares? That only works if the percentages are really that small.

And congratulations on the 5x increase in valuation!

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Re:Converting Investor into a Priced Round by gc2350 on Thursday November 03, 2022 @05:55AM (#33448948)

thank you for the advice, we will probably do it this way

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Re:Converting Investor into a Priced Round by definitelyhuman on Wednesday November 02, 2022 @08:23PM (#33444919)

How have you communicated your cap table and investment activities to the lead? Does the lead want the whole round? Did the higher valuation come from the lead or you? Provided you aren’t trying to shift their stake or acted as n bad faith, a reasonable VC should be fine with adding valuable people to help the company. SAFE that basically auto executes sounds like a strong option to me

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Re:Converting Investor into a Priced Round by gc2350 on Thursday November 03, 2022 @05:56AM (#33448956)

this makes sense, We will just communicate it to the lead

thanks you, this is really helpful

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Re:Converting Investor into a Priced Round by sn0w_crash on Wednesday November 02, 2022 @11:22PM (#33446588)

Easy. Give him a SAFE capped at $6m.

They will be part of the same round.

Problem solved.

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Re:Converting Investor into a Priced Round by gc2350 on Thursday November 03, 2022 @05:55AM (#33448949)

thanks for the advice

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Re:Converting Investor into a Priced Round by nivertech on Saturday November 05, 2022 @08:44AM (#33480877)

Either the lead investor (%xx @ $30M) should be OK with $150K @ $6M SAFE, or the first investor should agree to uncapped SAFE (which will convert @ $30M).

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