• 20+ years of experience
• CFO for private/public companies with focus on strategic transactions (M&A, JV, fundraise)
• 12 years with 4 different family offices: VC, LBO, structured and distressed investing: 25 deals, $500M+ invested
• Started career in investment banking
• MBA Columbia Business School, BS Babson College, CFA Charterholder
Sunrun example:
1. Seed
2. Series A
3. Senior Secured Debt
“Particulars of a funding round often reflect strategic goals the company is targeting in the next 12-18 months,”
-AlekseyKrylov
1) Founder launched the business with $0 – CEO, Sales & Marketing
◦ 1.1) Founder found a co-founder, took $0 – CTO – for 35% of the business
2) Angel investors put in $500,000 via convertible note, capped at $10M, 5% interest
3) Series A investors put in $5M via pref @$15M pre
4) Series B investors put in $20M via pref @$65M pre
5) IPO investors put in $50M via common @$100M pre
“One has to consider several funding paths and optimizetransaction structuringfordownside risk,”
-AlekseyKrylov
1) Founder launched the business with $0 – CEO, Sales & Marketing
1.1) Founder found a co-founder, took $0 – CTO – for 35% of the business
2) Angel investors put in $500,000 via convertible note, capped at $10M, 5% interest
3) Series A investors put in $10M via pref @$50M pre
4) Series B investors put in $10M via pref @$25M pre
“Sometime the startup needs to raise capital at the mostinopportunetimeand incur strong dilution,” -AlekseyKrylov
5) IPO investors put in $50M via common @$100M pre
ROFR ?
Anti-dilution
◦ WA?
◦ Full-ratchet?
“Negotiated protections can help protect investor rights and economic interest,”
-AlekseyKrylov
Dividends ?
1) Founder launched the business with $0 – CEO, Sales & Marketing
1.1) Founder found a co-founder, took $0 – CTO – for 35% of the business
2) Angel investors put in $500,000 via convertible note, capped at $10M, 5% interest
3) Series A investors put in $10M via pref @$50M pre
4) Series B investors put in $10M via pref @$25M pre
5)
“Capturing upside through creative structuringisabalancingact betweenbeinggreedyandgetting deal done,”
-AlekseyKrylov• IP Value sold for $12.5M
• Liquidation – waterfall triggered
• Series B gets $10M + (remember dividends and/or liquidation preference)
• Series A gets $2.5M
• Angels get zero
• Common gets zero
“No one wants to hit the brick wall but it happens…,”
-AlekseyKrylov