Option Pool Creation
Posted on 17. Aug, 2008 by squareroots in Basics, Graphical Examples
One of the more subtle points of valuation is option pool creation. The first method is an option pool created from the pre-money side, but calculated on a post-money basis. The second is an option pool created from the post-money side, and calculated on a post-money basis. This is where a graphical [...]
Convertible vs. Participating Preferred Stock
Posted on 04. Aug, 2008 by squareroots in Graphical Examples
Convertible Preferred Stock will either convert into common or stay as preferred (and take out its liquidation preference and dividend) in a exit event. For Participating Preferred Stock, the liquidation preference and dividends are taken out, and then converts into common. In common, the Participating Preferred Stock takes their ownership amount along with [...]
Dividends
Posted on 04. Aug, 2008 by squareroots in Graphical Examples
Dividends are an extension of the Liquidation Preference. Dividends for early stage companies are not typically paid out until an exit event. When they are paid, such as when the company is acquired, they combine with the liquidation preference and are paid before any common shareholders receive proceeds.
Let’s take an example. [...]