Knowledge

When a private company seeks to sell assets or its equity securities for a discounted value (sometimes heavily discounted), such offering is known as a “Fire Sale.”  Given recent economic pressures, many private companies are facing a stark reality: sell the company or face bankruptcy. While there are several ways private companies raise money in downturned markets, for many private companies, the only option is to consummate a Fire Sale, avoiding bankruptcy, where investors and founders alike will recover last following repayment to all creditors, with certain exceptions. This article explores some of the considerations a private company should consider when a Fire Sale is a realistic option for them.

When negotiating a term sheet for an angel or venture capital investment, control over future company decisions is frequently a key tension point between founders and investors. There are many different ways for a founder to retain, or a new investor to obtain, control over a startup.

This article briefly describes the venture capital industry in Chile, illustrating the main features investors need to know before entering the market.

Many companies are faced with the challenge of how to “bridge” the gap between the time when they will run out of funds and when they hope/expect to receive a cash infusion. Bridge financing rounds, which can be in the form of either an equity or debt investment, have been around for ages but, in today’s venture capital climate, have become a crucial fundraising mechanism in the world of high growth companies.

The goal of a company repurchase right is to motivate the founder/stockholder to continue working to build value at the company and to align their incentives with the company and its other stockholders.

When a private company offers additional shares for sale at a lower price than the price sold in the previous financing round, that offering is known as a “down round.” Stated differently, a fundraising round is said to be a “down round” when the company’s pre-money valuation in the round is lower than the post-money valuation of the previous round.