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This in particular makes PrivCo look stupid: "Two of the three investors listed on the PrivCo site as participating in the round didn't participate, and one is

This in particular makes PrivCo look stupid: "Two of the three investors listed on the PrivCo site as participating in the round didn't participate, and one isn't even an investor in the company."

FinTechCTO 14y ago
I read the PrivCo report and they didn't say who invested in the emergency funding round (except that Amazon did and that some of its other previous investors put up money and participated, some passed and did not). This is the language, which I thought to me was pretty clear: "According to PrivCo sources, the financing effort was led by LivingSocial's largest outside shareholder, Amazon.com, with participation from some of its major venture capital investors (who had already invested $823,624,695 in equity in LivingSocial - per PrivCo V.C. Funding data - before today's emergency debt financing) in the hopes of salvaging what they can, with strict terms in place to ensure they are first to be paid upon a sale or bankruptcy. (Prior investors in LivingSocial include: Lightspeed Venture Partners, Grotech Ventures, Revolution Ventures, and U.S. Venture Partners; the VC firm confirming today's deal terms preferred not be to named. PrivCo is not suggesting any particular firm named above participated in the new financing.)" http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... So LivingSocial damage-control CEO's "Talking Points Memo" spin is either because he's confused and mis-read/misunderstood, or more likely is making an "ad hominem" response (that is, try to attack the character of who he's debating, but without addressing the substance of their argument). And how come all of his details weren't provided to employees Tues or wed. or whenever his email bragging about the round, but then some were only dragged out of him / forced out next day (on liquidation preferences, on being a "down round" (major down round, minimum of 75% by his subtle hint, Reuters citing experts reviewing the docs say implied valuation much lower, maybe as low as the $110M itself. There are 400 laid off employees from LivingSocial who by next week have to decide to excercise their soon to expire common stock options and write a check for lots of money to livingsocial to buy the commmon stock at whatever strike price their options were at (anywhere from $1b to $2b to $5.7B valuation if granted in past year). One I know asked what she should do (she would have to write a check for "tens of thousands of dollars" to livingsocial to buy LS common stock, which if the valuation is under a Billion (and cmon it obviously is, look at Groupon look at Amazon's own auditors valuation of less than $100M). Now she didn't know what a liquidation preference is, or in this case accurately reported by PrivCo to be more than the 1x liquidation preference but "multple times" the $110M provided (as even CEO - though said nothing about it in Memo 1, fessed up in Memo 2 yes it is a several times liquidation preference, based on finanial metrics, but won't possibly go as high as 4x." Even if it's 3x, that $330M, plus the former $850M preferred raised. What I am going to tell her? And 4,000 employees who are deciding whether to stay or leave based on what their common stock options are worth sticking around for, and being misled by their CEO (again nothing said in Memo 1 at ALL about impact on common - which cmon folks is worthless - and in memo 2 says "ok I admit it, your common stock is diluated - but "not much" - even though we just got funding with multiple x liquidation preferences, we must pay that back plus interest ("dividends") within 4 years, then throwing out we might IPO and then it won't matter. That's Chutzpah to say that with a straight face. I think PrivCo did those employees a service, those 400 laid off about to write a check for LivingSocial common stock- and would have based on the glowing Memo 1 from the CEO - and now are correctly thinking they probably shouldn't as by any math they would be giving their hard earned savings to LivingSocial for a security (its common stock, not preferred) that is worth zero now. Kudos to PrivCo, we need more whistleblowers, whether co is public or private like here. Praying for the rest of the 4000 employees now tonight.

This in particular makes PrivCo look stupid: "Two of the three investors listed on the PrivCo site as participating in the round didn't participate, and one isn't even an investor in the company."

FinTechCTO 14y ago

I read the PrivCo report and they didn't say who invested in the emergency funding round (except that Amazon did and that some of its other previous investors put up money and participated, some passed and did not). This is the language, which I thought to me was pretty clear: "According to PrivCo sources, the financing effort was led by LivingSocial's largest outside shareholder, Amazon.com, with participation from some of its major venture capital investors (who had already invested $823,624,695 in equity in LivingSocial - per PrivCo V.C. Funding data - before today's emergency debt financing) in the hopes of salvaging what they can, with strict terms in place to ensure they are first to be paid upon a sale or bankruptcy. (Prior investors in LivingSocial include: Lightspeed Venture Partners, Grotech Ventures, Revolution Ventures, and U.S. Venture Partners; the VC firm confirming today's deal terms preferred not be to named. PrivCo is not suggesting any particular firm named above participated in the new financing.)" http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... So LivingSocial damage-control CEO's "Talking Points Memo" spin is either because he's confused and mis-read/misunderstood, or more likely is making an "ad hominem" response (that is, try to attack the character of who he's debating, but without addressing the substance of their argument). And how come all of his details weren't provided to employees Tues or wed. or whenever his email bragging about the round, but then some were only dragged out of him / forced out next day (on liquidation preferences, on being a "down round" (major down round, minimum of 75% by his subtle hint, Reuters citing experts reviewing the docs say implied valuation much lower, maybe as low as the $110M itself. There are 400 laid off employees from LivingSocial who by next week have to decide to excercise their soon to expire common stock options and write a check for lots of money to livingsocial to buy the commmon stock at whatever strike price their options were at (anywhere from $1b to $2b to $5.7B valuation if granted in past year). One I know asked what she should do (she would have to write a check for "tens of thousands of dollars" to livingsocial to buy LS common stock, which if the valuation is under a Billion (and cmon it obviously is, look at Groupon look at Amazon's own auditors valuation of less than $100M). Now she didn't know what a liquidation preference is, or in this case accurately reported by PrivCo to be more than the 1x liquidation preference but "multple times" the $110M provided (as even CEO - though said nothing about it in Memo 1, fessed up in Memo 2 yes it is a several times liquidation preference, based on finanial metrics, but won't possibly go as high as 4x." Even if it's 3x, that $330M, plus the former $850M preferred raised. What I am going to tell her? And 4,000 employees who are deciding whether to stay or leave based on what their common stock options are worth sticking around for, and being misled by their CEO (again nothing said in Memo 1 at ALL about impact on common - which cmon folks is worthless - and in memo 2 says "ok I admit it, your common stock is diluated - but "not much" - even though we just got funding with multiple x liquidation preferences, we must pay that back plus interest ("dividends") within 4 years, then throwing out we might IPO and then it won't matter. That's Chutzpah to say that with a straight face. I think PrivCo did those employees a service, those 400 laid off about to write a check for LivingSocial common stock- and would have based on the glowing Memo 1 from the CEO - and now are correctly thinking they probably shouldn't as by any math they would be giving their hard earned savings to LivingSocial for a security (its common stock, not preferred) that is worth zero now. Kudos to PrivCo, we need more whistleblowers, whether co is public or private like here. Praying for the rest of the 4000 employees now tonight.