Convertible Stock is stock that converts into another class or series of stock, typically preferred stock that converts into common stock.
Convertible Debt is an alternative to equity fundraising. The investor “lends” the startup money at a reasonable interest rate and with a maturity date in the 12-24 month range (usually). The understanding and intent of the investor and company is […]
Conversion Rights are the rights of a preferred stockholder to convert preferred stock into common stock.
A Conversion Price Adjustment is the adjustment to the conversion price of a preferred series of shares upon the occurrence of certain events. It is typically an anti-dilution right.
A Conversion Discount is when the holder of a convertible note has a right to convert into a subsequent financing round or transaction at a “discount” to the price per share of that round.
Contingent Liability is a liability that is not certain, but could arise based on certain events. For example, if a startup is seeking capital during an ongoing lawsuit, the startup would need to disclose the lawsuit as a contingent liability […]
A Cram Down Round is a financing round where new investors receive favorable contractual terms that significantly reduce (dilute) previous investors ownership percentages and rights. Typically, to receive these terms, the new investors must invest substantial amounts of money.
Churn Rate is the loss of future revenue due to the loss of a customer/subscription. There are two types of churn: Gross Churn and Net Revenue Churn. Gross Churn: MRR lost in a given month/MRR at the beginning of the […]
A Clawback is when limited partners take management fees back from general partners in private equity arrangements. Most private equity agreements have clawback provisions that allow for this action after a fund has substantial losses and a general partner has […]