7/26/22 - Carlos red line TBV terms
by Parker · 30 things on Twos
- Laying out game plan for the next stock financing, it will impact your next round
- Series A or Seed investors will see they can take advantage of us
- SAFE will not convert until 2.5M, push down to 1.5M
- Convertible can have a threshold because we could
- 2.5M -> 1.5M
- Not typical so we can push down on it
- SAFEs stay out there, option is what we can expire
- 2.5M is the conversion of the SAFE, which is a head scratcher
- D&O insurance could be 10k
- We don't want to spend our raise on that
- If you give them a board observer seat then we wouldn't need D&O
- We negotiate with the series a investors on the board
- Most favored nation has reason behind it
- Use Major Investor Rights as negotiation tactic (horse trade)
- They will only invest the 1M if we are at a valuation larger than 16M
- Doesn't see a way that we could give up 30-40%, unless things are going really badly
- Option doesn't trigger if the SAFE doesn't trigger?
- They wouldn't want to trigger the option if the next round is 10M
- Preferred Stock in voting rights and protective provisions isn't defined
- We are diluting their power
- We read the room, they may decide to walk
- Future rights will depends on the next financing
- Taking out Drag Along to see what the next investor will come up with
- If the board approves the sale of the company and the shares, then everyone else is contractually dragged along
- Lets not tip our hand with this 200k SAFE investment
- SAFE financing they can do for under 5k. It will be more expensive than it should be. Shelby is taking the lead on most of the work, he is pulled in to weigh in and be on the call. They are trying to structure it, we will get the best deal in town, at least SD, it will be more expensive than it should
- You'd be better off, raising on SAFEs from uncles
- Far away from getting the money. You're getting into something complex when we are crawling and trying to do a SAFE financing
- The investment document is not even the financing documents. There are just the terms and
- Full loaded red lines, and we can give