3 ms·

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

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?

SeoxyS 11y ago
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.