Cap Table Restructuring for Seed Stage Startup

The Challenge

A two-sided marketplace with >$100k GMV had raised a convertible note, but the business had not taken off as hoped, resulting in a capital structure that was not viable to incentivize the founder, employees or new investors. Lead investor was initially not open to negotiations.

The Solution

• Defined and modeled options for repairing cap table, including debt restructuring, issuing new shares and liquidation

• Made key introductions to top VC investors for feedback on proposal to lead investor

• Supported negotiations with lead investor

The results

An agreement was reached with the lead investor to convert debt into preferred equity — saving the company from bankruptcy.

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