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  • Need clarity on a revamped term in a term sheet from a VC

    updated 3 weeks ago 0 Member · 1 Post
  • David

    Member
    October 31, 2019 at 12:32 am

    We were negotiating the value cap on a convertible note with a VC. We negotiated $1M higher on the cap. The original language said as follows: “A fully diluted valuation cap of $X” In the new language, they updated it to read as follows: “A fully diluted valuation cap of $X (including all outstanding debt). For greater clarity, the valuation cap refers to the enterprise value of the Company, including all debt, equity, and conversion of convertible instruments (debentures, warrants, options, etc) (i.e. all outstanding convertible instruments convert in the “Pre-Money”).” We have about $750,000 in dilutive convertible notes/SAFEs we’ve taken previously. Is this additional language basically saying the effective valuation is 3.25M (assuming new figure is 4M) because those notes convert before this value cap? – by hq overview Jenksz – –

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