How do investor terms affect my equity?

Investor preferences are paid before common shareholders (you) in a liquidation or sale. If investors get 2X liquidation preference and the company sells for $10M but owes investors $15M in preferences, common holders (employees) get nothing. This is serious.

What is anti-dilution protection?

If the company raises future funding at a lower valuation, anti-dilution protects investors by adjusting their shares downward in price but giving them more shares. Employees typically don't get this. It's unfair but standard.

Can employees negotiate side letters?

Sometimes. Executives often get side letters with special terms (acceleration, extra equity, cash bonuses on funding). Regular employees rarely get them. Push for single-trigger acceleration at minimum.

How do investor terms affect my equity?

Investor preferences are paid before common shareholders (you) in a liquidation or sale. If investors get 2X liquidation preference and the company sells for $10M but owes investors $15M in preferences, common holders (employees) get nothing. This is serious.

What is anti-dilution protection?

If the company raises future funding at a lower valuation, anti-dilution protects investors by adjusting their shares downward in price but giving them more shares. Employees typically don't get this. It's unfair but standard.

Can employees negotiate side letters?

Sometimes. Executives often get side letters with special terms (acceleration, extra equity, cash bonuses on funding). Regular employees rarely get them. Push for single-trigger acceleration at minimum.

AI Contract Analysis

Investor Side Letter & Equity Adjustment — Navigate Investor Funding

When your startup raises funding, investor side letters and equity adjustments can impact your equity value. Investors get preferences (special rights), liquidation preferences, and anti-dilution protections. Your equity grant might get diluted or adjusted based on new funding. Our AI helps you understand how investor terms affect your equity and when you should negotiate changes.

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What Our AI Covers

Preference stack and liquidation preference analysis
Anti-dilution protection for investor equity
Employee equity dilution projection (multiple rounds)
Conversion and voting rights clarity
Employee side letter opportunities
Equity adjustment negotiation points

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Side Letter & Employee Equity Adjustment (Investor Scenarios) — Frequently Asked Questions

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