If given the choice, founders would issue common shares to investors, as it would speed up negotiation, keep the capital structure straightforward by having only one class of stock, and put investors on the same level as common shareholders. * This is Part 3 of a 3-part series. Visit Part 1 at “Angel Deals: Quick [...]
Preferred Stocks Are Issued In Series Unlike common stock, preferred shares are issued in series to represent each round of financing. For instance, Series A typically refers to the first round, Series B the second, Series C the third, and so forth. * This is Part 2 of a 3-part series. Visit Part 1 at [...]
Investing in equity means that you invest your money in exchange for the company’s stocks, or equity ownership in the company. While novice investors may agree to buy common stocks, experienced investors almost always request preferred stocks. There are exceptions, of course, as discussed in this short, three-part series. Angels Used to Purchase Common Stocks [...]
In Part 1, we answered Judd Aston’s question on liquidation preference by illustrating how it protects investors’ downside. What isn’t as obvious is that it also prevents the founders from selling early at investors’ expense. Before you click away thinking that you got a lawyer and you don’t need to understand the terms, check out [...]
Judd Aston writes – I was asking my lawyer about liquidation preference and he bombarded me with legal jargon. Fifteen minutes later I still had not a clue what he had told me. So my question is what is liquidation preference? Some examples would be great. Bravo. You obviously understand the benefits and convenience of [...]
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