Trendsetters Inc

2507 WordsJan 31, 201311 Pages
| TRENDSETTERS INC. Term sheet Negotiations | Entrepreneurship and Venture Capital | | | Introduction: Trendsetter Inc. was formed by Wendy Borg and Jason Kushdog, the CEO and the COO respectively, in March 2000, to deliver innovative warehouse and distribution management software program for clothing retailers. The “founders” started the firm after quitting their respective jobs and decided to pool in their savings in the firm. The software produced by the firm would contain a demand forecasting module that would be capable of performing tasks for the fashion industry with the same impact that the spreadsheet had done for accounting. Initially the firm started out its operations with the savings of both the owners, but each…show more content…
A VC investor takes adequate precaution to protect its investment against such liquidation incidents. In the case of Alpha investors, in case of liquidation, they require the payment of the unpaid dividends per Share A preferred stock. This amounts to a value of $ 380,952.40. Apart from the unpaid dividends, the investor will participate prorate basis with the common shares until it has received three times its initial investment. Hence Alpha will receive an amount of the dividends $ 380,952.40 plus the prorate participation of $ 15,000,000. From the below table, we see that the VC will get pro-rata share of the liquidation until the value reaches three times initial investment, which is $ 15,000,000. Post this there is no indication from the VC as to whether they will acquire more worth from the firm. With regards to Mega ventures, the liquidation process was defined thus. The merger or consolidation of the firm which involves transfer of control to another entity, or a sale or acquisition of 50% or more of the firm of the company assets in a single or series of related transactions will be termed as liquidation. Such a transaction will not be deemed liquidation if 70% of the Series A shareholders, elect not to consider such a transaction as liquidation. In case of liquidation, Mega investors required 1.25 times their initial investment, combined with
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