Liquidation Preference

“So if you're counting on liquidation preference, then probably nobody's really making money. Maybe founders doesn't make anything, but VC is also not generating much returns.”

“I don't believe liquidation preferences matter. I don't believe they're a big deal, despite what they are next. But my liquidation preference has always been, and I put it in quotes, not true, knowing the founder would never quit. That's my protection as a see…”

“You don't really care as a late stage investor. You don't care whether it's one or one Oh six or nine 84, because you're making the exact same amount.”

“And so if a company's raised three hundred million dollars in there, Worth two billion LickPref doesn't matter that much. If the valuation is now four hundred million, then the LickPref could take 75% of the company in a sale. And that's a real, you know, that…”

“I think it's overrated. You know, as I mentioned before, our deals, our investments, are not real investments the way you go by Apple shares on the stock market. They are long-term contracts around a vision, and ultimately it doesn't really move the needle tha…”

“Well, I would disagree with Nick, because I would say, prefs are fundamental. Saying, you should give your investor your, their money back, right, before you kind of, you know distribute the spoils to everybody. I think that's a fair tenet.”

“Those provisions exist for a reason, which is because in harder times, being able to get back one X, not 0.2 X actually across several companies, which is often the case makes a big difference. It can make a half turn on a fund.”

“If you're a founder listening to this and you're contemplating an up round with a liquidation preference more than one or a down round, do 100% of the time do the down round.”

“And I've seen so many companies, especially in the last few years that raised more money than they're worth. And so now the founders find themselves in a position where they sold their company, which has revenue, which has growth, which has a real product that…”

“In a lot of cases, by the time you get to this point, even if you've only raised a few million dollars, the likelihood that you're going to sell something and get over your preference hurdle is usually pretty low”

“We've seen structure return in the marketplace in the form of liquidation preferences.”

“Like every time you get your money back as a VC, it means you made a mistake in some ways.”

“Like you can raise with just an idea or a deck or just a It's a team or whatever, but then the vision has to be big, and that does usually exclude you or preclude you from actually doing the kind of exit where like at 20 or fifty million bucks, because just th…”

“When you put money into a private company, on the other hand, particularly at these late, with these late stage deals, you have a bunch of what tends euphemistically to be called a structure. Around it, which means you have things like liquidity preferences, a…”