Finance and Term Sheet
1) What are the most important terms for Laracey? Founders’ termination term is very important for Laracey because it increases the possibility that the unvested equity of the founders could be accelerated when the incoming CEO terminates them. It directly protects the benefits of the founders. 2) What are the most important issues for Guerster?
Mergers, redemption, reorganization of the company, or transfers of control of edocs are the most important issues for Guerster. These issues will directly influence his proportionate ownership of edocs.
3) What is 'liquidation preference/participation?' Both in general, and specifically in the proposed term sheet. Compare the term sheet to M-Y: what type of security (CP, RP, PCP) is this?
A liquidation preference tells an investor where she stands in the capital structure hierarchy. When there have been multiple rounds of investment, it is common for the latest-round investors to get their money back first. So the Series A preferred is getting the first dollar from any liquidation first. In this case, the investor owns the Series A preferred stocks, so in case of merger, reorganization or transfer of control of edocs, Guerster first get paid. The security is Participating Convertible Preferred (PCP) because in the liquidation term, it is mentioned that Participating goes away on valuation that corresponds to 50 million. In addition, there is conversion term in the term sheet.
4) Why is CRV so concerned about board representation?
Because CRV would like to ensure that the board members could represent its right, and the company develops in the direction it expects and doesn’t spend the money it invests in other business concepts.
1) Critique Steve Papa's fundraising strategy for the "C" financing round? What steps did he take that were sensible? What mistakes did he make?
When Steve Papa realized he had to raise money, the Enterprise IT spending was slowdown. The behavior of both venture
Mergers, redemption, reorganization of the company, or transfers of control of edocs are the most important issues for Guerster. These issues will directly influence his proportionate ownership of edocs.
3) What is 'liquidation preference/participation?' Both in general, and specifically in the proposed term sheet. Compare the term sheet to M-Y: what type of security (CP, RP, PCP) is this?
A liquidation preference tells an investor where she stands in the capital structure hierarchy. When there have been multiple rounds of investment, it is common for the latest-round investors to get their money back first. So the Series A preferred is getting the first dollar from any liquidation first. In this case, the investor owns the Series A preferred stocks, so in case of merger, reorganization or transfer of control of edocs, Guerster first get paid. The security is Participating Convertible Preferred (PCP) because in the liquidation term, it is mentioned that Participating goes away on valuation that corresponds to 50 million. In addition, there is conversion term in the term sheet.
4) Why is CRV so concerned about board representation?
Because CRV would like to ensure that the board members could represent its right, and the company develops in the direction it expects and doesn’t spend the money it invests in other business concepts.
1) Critique Steve Papa's fundraising strategy for the "C" financing round? What steps did he take that were sensible? What mistakes did he make?
When Steve Papa realized he had to raise money, the Enterprise IT spending was slowdown. The behavior of both venture