What is a 5% non active equity stake?
And what on earth does it mean to a code-monkey?
2 comments
I haven't heard that expression. I could guess, but you'd do best simply to ask whoever's offering it to you what they mean by it.
It means you don't get a board seat, and you probably get common, non-voting stock.
Sadly, it probably comes WITHOUT an anti-dilution clause, meaning that any new stock allocated will dilute your 5%. As a company progresses through its capitalization phases, new stock is likely to be allocated, usually in new classes that offer more protection to the investors, and less protection to the "monkeys" like us.
Your "5%" will likely be converted to a number of shares at the time it is executed, and that number of shares will likely NOT be 5% of the total number of shares available when a liquidation event (IPO/Buyout) occurs.
Sadly, it probably comes WITHOUT an anti-dilution clause, meaning that any new stock allocated will dilute your 5%. As a company progresses through its capitalization phases, new stock is likely to be allocated, usually in new classes that offer more protection to the investors, and less protection to the "monkeys" like us.
Your "5%" will likely be converted to a number of shares at the time it is executed, and that number of shares will likely NOT be 5% of the total number of shares available when a liquidation event (IPO/Buyout) occurs.
"It means you don't get a board seat, and you probably get common, non-voting stock." Most likely this is what it meant.
Although it might not be as bad as it sounds like in your explanation. I dont think anti-dilution clause is common, but I may be wrong
Although it might not be as bad as it sounds like in your explanation. I dont think anti-dilution clause is common, but I may be wrong
and just to support my assumption here is thread on quora on anti-dilution
http://www.quora.com/How-common-are-anti-dilution-clauses-fo...?