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I used Founders Preferred shares to get liquidity at the A (for a now defunct startup). In our case, we offered all vested employees the option of selling in t
by anxman 2y ago
I used Founders Preferred shares to get liquidity at the A (for a now defunct startup).
In our case, we offered all vested employees the option of selling in the same round on the same terms.
I personally don’t recall any disclosure requirements at 10 people; however, we didn’t have that many participate so perhaps it didn’t apply.
In general, Founders Preferred does layer on the preference stack but also hopefully by a relatively trivial amount to the overall funding size.
- Finbarr 2y agoYes, as I mentioned it only applies when you have 10 sellers.
- throwaway-blaze 2y agoFounders never have preferred shares, at least not the same class of preferred (with the same preferences) as investors.
- janjongboom 2y agoNot never. E.g. all the capital we as founders put in the business before we raised our seed round was converted into Series Seed Preferred shares at the same rights as angels / seed VC. Small portion of total equity but still.
- anxman 2y agoFounder Preferred is a special class of stock that can convert into Preferred when sold. It’s different from Common as it doesn’t affect the 409A. IANAL.