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I'm a bit surprised to see it stated that large investors ended up underwater, simply because they usually protect themselves first. Maybe the demand in Uber wa
by gpapilion 7y ago
I'm a bit surprised to see it stated that large investors ended up underwater, simply because they usually protect themselves first. Maybe the demand in Uber was so high they could skimp on their normal protections.
A year or two from now, I'd love to see what the actual paper losses were at this moment.
- sjg007 7y agoYeah I thought they had liquidation preferences. Would they not have some deal where Uber has to make them whole by issuing them more stock up to the valuation price? Maybe that all goes away at the IPO, but surely to get sign off to have the IPO they must have gotten some guarantee.
- kijiki 7y agoLiquidation preferences go away at an IPO because the preferred shares convert to common.
- sjg007 7y agoRight, but if the value was $42 a share at IPO and that is less than what the late stage investors expected, then why would they sign off on the IPO without extra shares being issued?
- sk5t 7y agoThe late investors aren't forced to liquidate and any liquidation preference is extinguished at IPO... the terms of the IPO having been properly authorized, the formerly-preferred holders simply have no special say in the matter anymore.
- pge 7y agoKnowing nothing about the specific terms of any Uber investment, I'll just say that in every deal I have been a part of, the liquidation preferences and associated protections went away at IPO (when all shares convert to common). It will be interesting to see if the Uber IPO (if it doesn't bounce back) makes the late-stage pre-IPO investors less supportive of going public in order not to have to give up those protections.