My price, your terms

Series A fundraising practice sessions

Author

Michael Morgenstern
January 21, 2025

Happy Tuesday Brex community,

Many of our readers are navigating the Series A and Series B fundraising landscape, where mastering the math behind deal terms is non-negotiable. Imagine proposing a $15M Series A investment, and an investor says, "my terms, your price or my price, your terms." While the valuation might be set by the market, you control the deal structure. Make sure to understand concepts like pari passu, where investors share payouts proportionally to their investment, ensuring fairness—like splitting a pie based on who contributed more. Also ensure you understand liquidation preferences! For example, a 1x preference means investors get their initial investment back before anyone else. But variations like multiple or participating preferences can tilt the distribution in favor of certain investors, so it's crucial to navigate these terms wisely.

In a competitive fundraising round, running a tight, transparent process is key to maximizing leverage without losing trust. Set a clear timeline, create urgency with genuine interest from multiple investors, and always have a backup plan to avoid being cornered. Closing the round isn't just about securing funds—it's about setting your company up for long-term success. Don't let the excitement of deal competition distract you from the math and structure that truly matter. If you're raising a Series A or B and want to practice negotiating terms, dive into waterfall analyses, or explore the market, reach out!

Growing together, Michael Morgenstern

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Tyler Temple and Ivan Shterev are the co-founders of Pollentia

Pollentia born in Dallas, Texas, is redefining the marine industry by manufacturing smart electric boats that combine sustainability, advanced technology, and luxury. Our models feature cutting-edge systems, including the AI Co-Captain, advanced safety protocols, and intelligent maintenance diagnostics. These innovations are designed to enhance every journey, providing ease of use, reliability, and peace of mind for boaters. With a focus on precision engineering and seamless integration of technology, Pollentia is setting a new benchmark for modern marine travel.

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Pioneer1890 is the first special situations platform for venture-backed companies in critical industries (aerospace, defense, healthcare IT, industrials, public safety, and government services). They roll up their sleeves and work alongside founders & investors to turn stressed companies into profitable and viable companies with strong exit potential. They do acquisitions of Seed to Series-C companies that are facing a variety of headwinds and challenges, plus occasionally work with companies outside their portfolio through their strategic advisory arm. They bring over a decade of experience scaling companies in highly regulated markets as institutional investors, founders, executives, and operators, including building the first laser communications satellite network, accelerating growth through IP-driven M&A, and building and leading companies to strategic exits. They are based in Northern Virginia, and if you want to get in touch and learn more, please visit their website here.

 

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