Venture Capital Terms: Liquidation Preferences - Critical to Your Success
Liquidation Preferences can define the Return You Make On Exit - Ignore this Critical Term Sheet Issue at your peril!Watch Promo
Imagine you are a Founder and you are negotiating a Term Sheet with an investor, perhaps a Venture Capital investor.
What do you think is the most critical part of the Term Sheet after the valuation?Right, Liquidation Preferences.
These sound harmless enough, but what if I called the term, "“How the investor gets all their money back first and you may get nothing” That would get your attention, wouldn't it.
You ignore Liquidation Preferences at your peril as you define the terms of your exit return when you agree these investment term sheets with investors.Don't forget everytime you accept external equity investment, you are giving up part of your exit return to them.The terms on which you do this are critical to how much you will make at exit
And they are looking to minimise their risk at your expense.
This is not actually unreasonable but you need to be able to understand the issues involved in Liquidation Preferences so that you can negotiate them successfully and get the best possible deal for yourself and your other existing investors.
In this Course we will discuss:
- Liquidation Preferences: Why are they important?
- What are liquidation preferences?
- The Difference between Ordinary Shares and Preferred Shares
- UK SEIS and EIS Schemes and Liquidation Preferences
- Types of Liquidation Preferences
- Rights of Conversion to Common Stock
- Dead Zones
- Seniority in Future Financing Rounds
- How Can Liquidation Preferences affect your returns?
- Should You Offer Liquidation Preferences to Investors
This is not an issue you can afford to be ignorant about.If you are, then your new investors will capitalise on your ignorance at your expense.
Nothing in this course offers financial or legal advice.For this you must go to your own legal and financial advisers.
Enroll today and make sure that you understand Liquidation Preferences!
Enjoy the course!
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