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> Forget the fact that some of these valuations are illusory because the most recent investors have structured their investments as debt in all but name, meanin
by mcintyre1994 11y ago
> Forget the fact that some of these valuations are illusory because the most recent investors have structured their investments as debt in all but name, meaning that they will stand to profit even if the company is worth far less.
Can anyone recommend anything to read to get an insight into how one of these deals works?
It's always seemed like liquidation preferences push a deal a fair way toward debt because (I think?) they get paid first and fully before anybody else. But that doesn't seem to be a recent thing at all.
- danielrhodes 11y agoA lot of these big rounds these unicorns are raising have crappy liquidation preferences, making the signal they give off of confidence in the company look much different.
- mcintyre1994 11y agoDon't Sequoia do this too though? They had 4x and 2.7x in Zappos rounds [0], they were in Stripe's reportedly >2x Series C [1]. Not trying to call out the author or Sequoia but this doesn't seem like anything new. Are the current deals even worse than 4x? [0] http://www.wac6.com/wac6/2009/08/sequoias-liquidation-preference-in-the-amazon-zappos-deal.html http://www.wac6.com/wac6/2009/08/sequoias-liquidation-prefer... [1] https://pando.com/2014/01/24/memo-to-stripe-winning-the-hearts-of-valley-startups-is-not-winning-payments/ https://pando.com/2014/01/24/memo-to-stripe-winning-the-hear...