56 lines
2.2 KiB
Org Mode
56 lines
2.2 KiB
Org Mode
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#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../../../../_share/media/css/org-mode.css" />
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#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/theme-business.css" />
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#+title: Section 4 | Lesson 25 - Not Understanding Security Structures can Hurt You
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* Links
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- [[./../mba-main.org][<Back to Main MBA]]
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- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4311456#overview][S04:L25 - Not Understanding Security Structures Can Hurt You]]
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* Notes
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Not understanding security structures is a death sentence
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Many great websites that can also help
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** common stock
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- lowest of the low
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- last claim on company
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- can be sold to others
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- if you invest in publicly trading company you'll get common
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- employees usually get this
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** preferred shares
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- better
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- liquidation preference
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- in case of bankruptcy get paid first
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- get dividends
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- conversion
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- at the IPO preferred shares convert to common shares
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- usually not allowed to sell them for a period of time (6 months)
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** rounds
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*** down round
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if you price yourself to high on a particular round, you will not be able to meet that value on the coming round, which means no one will invest in you again.
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at that point you will get diluted
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*** up round
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if you price low, then your b series will be at a higher valuation
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the venture capitalist that invested in the A round will be allowed to buy enough to give him the same number of shares.
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** Convertible debt
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- if the firm that gets the convertible note and can't pay the debt back, it can be converted back into stock for the investor
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- company needs money between rounds
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- they go to investor and say hey, gimme money as a loan
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- if i can't pay back the loan, you get shares at a discount for the next round
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- debt instrument and has senior debt claims over preferred shareholders3
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- if firm can't pay the debt than the convertible debt holder can take the companies stuff
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** Warrants
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- an option to get shares later for free if they invest early
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** Options
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- call option: the right to BUY shares at a specified price in the future
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- usually given to employees to incentivize them to stay in the company
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