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As an investor who invests at the Seed to Series A stage, I can tell you that a non-participating 1x liquidation preference is standard. I would refuse to inves
by kenneth 8y ago
As an investor who invests at the Seed to Series A stage, I can tell you that a non-participating 1x liquidation preference is standard. I would refuse to invest in any deals that didn't include it, but won't be asking for anything more.
I think it's a pretty fair term. It prevents investors getting screwed by a sale for less than the round valuation, which could look quite attractive to a founder who could get their first million, screwing their investors in the process.
- greglindahl 8y agoAs a comparison, the startup I helped found in 2004 had a 2X liquidation preference -- that was a bad time to raise money. And as a founder, I'll happily take 1X.
- naturalgradient 8y agoThank you this is a helpful data point.
- walshemj 8y agoIn the USA or UK ? The UK tends to have stronger protection for employee shares -not that there haven't been some dodgy deals BAXI getting taken over by carpetbaggers and screwing the owners is a well know case in the UK. And I have been on the receiving end of losing $1,000,000 at Poptel if only ICANT weren't such a bunch of ass%^&&S and the CoOp had been a bit more tech savvy - still water under the bridge. Poptel was a worker co op btw so I had .5%
- deleted 8y ago[deleted]
- kenneth 8y agoThis is in the USA. While I've invested in a few foreign companies, I'm not familiar with how other countries deviate generally from SV norms.