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20+ years in tech and finance and I still can’t believe liquidation preferences are legal. Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
20+ years in tech and finance and I still can’t believe liquidation preferences are legal. Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
By the time most of us are dead, I think we’ll have enough evidence that human systems mostly don’t work (this is a personal realization, just for ourselves, no one will be able to strip you have the realization). If it worked for you, congrats, you were lucky.
20+ years in tech and finance and I still can’t believe liquidation preferences are legal. Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
Otherwise, the risk is investors put in $1m for 10% of the company, only for the founder-CEO to decide a month later - perhaps totally genuinely and honestly after initial R&D - that the entire business plan wasn't viable after all and the best thing for stockholders is to liquidate the company... and then walk away, personally, with $900k while returning only $100k to the investors. And obviously because this scenario is possible, there would be great temptation among dishonest founders to "realise" their companies "aren't viable" in order to walk away with all the cash. Something has to protect investors from this outcome, and remove the perverse incentive on founders to promptly liquidate after getting investment. A liquidation preference where the investor gets repaid before any distributions go to other stockholders is one way of achieving that protection; what alternative would you prefer?
As for liquidation preferences with a multiplier (i.e. we get paid back X times our investment before anyone else gets anything), eh, I wouldn't outright make them illegal, but it's less clear to me they are always serving a legitimate purpose, and they may grossly mislead the public about the actual valuation of the company implied by a given funding round AND mislead naive common stockholders and options holders about how much of the company they really own and what they can really expect to make in an exit.
Is “have been made redundant” normal phrasing in the UK, or did the BBC just decide to use that kind of bloodless phrasing for “fired?”
20+ years in tech and finance and I still can’t believe liquidation preferences are legal. Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
You've got that backwards. Liquidation preferences typically go to early stage investors who receive special share classes. Those arrangements are fully disclosed to later stage investors. They knew what they were getting into and it's their own fault for making a sucker bet.
From the guardian: “But about 220,000 investors, who contributed £75m in crowdfunding across seven “equity for punks” rounds, could walk away with nothing.” I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.
I don't see how there's many real investment opportunities where crowdfunding wouldn't result in largely unfavorable terms for the crowd.
Earlier quoted context omitted.
I mean is it in common enough use that it shouldn’t stick out to me that a newspaper decided to use it instead of “fired,” “sacked,” or “laid off?” It’s got a whiff of “was involved with a shooting.”
It has legal implications, as others have expressed. It means your position was made redundant, and it allows you to be terminated with little legal complication, but on the understanding that the same position can't be re-hired for within a period, I think it's 6 months. Of course in reality it's not that simple, you get "made redundant" then they rephrase the job title a bit and hire someone else. Redundancy in the…
Earlier quoted context omitted.
You've got that backwards. Liquidation preferences typically go to early stage investors who receive special share classes. Those arrangements are fully disclosed to later stage investors. They knew what they were getting into and it's their own fault for making a sucker bet.
New funding round investors generally get seniority over old But new money may allow buyouts of existing at that time so early team or investors can cash out a bit early And common doesn't cash out till IPO or private market equivalent, or yes, gets screwed
Hopefully they took advantage of the discounted beer.
From the guardian: “But about 220,000 investors, who contributed £75m in crowdfunding across seven “equity for punks” rounds, could walk away with nothing.” I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.
Well, the "investment" came with perks like free beer occasionally, 15% off your tab, invite to private events, etc. Stuff you don't get when you buy a share of MSFT. In my mind if an investment comes with perks like that it's more of a donation than an investment
The big cruise line companies will give shareholders on-board credit, Berkshire Hathaway has sales from their subsidiaries at the yearly meeting, Intercontinental Hotels has discounts, etc.
One of the customer service backdoors for some companies is to buy a share and contact investor relations if you are having a problem.
Earlier quoted context omitted.
It also seems like GLP-1 drugs may reduce drinking too.
Started ozempic over a year ago. I can do like one beer per social outing these days.