VW Blog

VDR Ch. 4, Part 1: Liquidation Preference

August 1, 2017   |   By Vela Wood

Office Hours is a podcast hosted by Vela Wood venture attorneys Kevin Vela and Aaron Terwey covering general issues related to small businesses and startups. Venture Deals Review is a series of Office Hours episodes discussing the book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld and Jason Mendelson.

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In this episode, Kevin and Aaron review “Chapter 4: Economic Terms of the Term Sheet” and discuss why the difference between pre-money valuation and post-money valuation matters when negotiation with a VC, why price per share is critical in later financing docs, what is included in a fully-diluted basis, why accepting a lower valuation can be the best option, the difference between participating preferred stock and non-participating preferred stock, and why play-to-pay scenarios are no longer common.

Venture Glossary:

You can find definitions and examples of terms found in the book and this podcast in our Venture Glossary.

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You’ll want to bookmark Venture Glossary as a quick reference for navigating the venture world. We love talking about startups, so follow us on Twitter. And feel free to email us at podcasts@velawoodlaw.com with any comments or suggestions!


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Vela Wood

Vela | Wood is a boutique corporate law firm that focuses on small businesses, entrepreneurs, and startups.