Allis: Large preferred venture rounds increase liquidation risk for common shareholders
Ryan Allis · #710 iContact Founder Returns To Mixergy After $169M Sale – with Ryan Allis · Apr 9, 2012 · at 21:38
Ryan Allis, co-founder of iContact, discusses the structural risks of raising large venture capital rounds with preferred liquidation preferences.
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“When we raised forty million dollars in, in series B preferred security, which is how you do venture capital, that forty million dollars is now senior in the capitalization structure, which means above all of the common shareholders, which is me, my co-founder, all of the employees, and so if you don't sell for more than forty million dollars, you get nothing.”
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