Capped and uncapped notes

Conversion discount

"Don't raise too much via convertible."

(i) First problem - rolling close, may raise way more over a period of time

(ii) Second problem - actual dilution not known until the next round of equity financing

Post-money valuation includes

• Option pool for employees
• Convertibles O/S

i.e. on a fully diluted basis

Liquidation preferences

1x, participating and non-participating

Seniority of preferences - stacked

Auto conversion for preference shares

• IPO event, single share class
• Triggers at price per share, exit multiple on past investment etc
• Protection for later stage investors

Preferred vote on voluntary conversion

Focus on capital P - allows for majority of all preferred investors to convert to common

Anti-dilution (i.e. down round protection)