VC Convertible Debt Multiple Liquidation Preference Cash On Cash Return Impact – Liquid Scenarios

In 2008, more and more investors starting requesting multiple liquidation preference on convertible debt issued to early stage and venture backed companies. This video illustrates how to quickly determine the investment cash flow impact of these transactions on venture capitalists, angel investors, founders and other parties using Liquid Scenarios. In the interactive iCap Table display, simply right click on the Convertible Debt you want to apply a multiple liquidation preference to. After right clicking, we select “Edit details” to display a dialog that contains every aspect of our convertible debt. One such aspect is an interactive tabular display of Model Conversion Scenarios. This includes accrued interest, accrued warrant coverage on our convertible debt, principal and, if the conversion security is known, the number of conversion shares issuable if the debt was to convert on a given date. To see the impact of the multiple liquidation preference on our convertible debt, we simply right click on Principal and select “Liq. Preference” Liquid Scenarios dynamic waterfall now shows the impact of the convertible debt’s multiple liquidation preference on everyone’s cash on cash returns. Selecting a hypothetical VC investor, such as Kodiak, shows their returns across significant exit values assuming Kodiak doesn’t participate in the bridge note. To see how Kodiak’s cash on cash return potential would be impacted by participating in the convertible debt, we simply right click …