Alright, for your education startup employees, let's run through some numbers I have as a stockholder in Clustrix.
In 2010, they raised $12M in their Series B at ~$100M post-money valuation. Things were looking alright.
In 2013, they raised $16.5M in their Series C, and then shortly thereafter $10M in an unusual series D. That funding round reverse-split the outstanding stock 26-to-1 and converted all existing shares, preferred or otherwise, to common stock. What was left was $10M in new preferred stock, and $20M in existing common stock! New post-money valuation: $30M. This down round ended up being a 30x dilution for existing shareholders. If you had a tenth of a percent of $100M before, now you had a hundredth of a percent of $30M. Yowza!
After that bath, the board amended the charter so they stopped mailing out these notices. I don't know what's happened since, but I'll find out soon enough.
I feel bad that the company wasn't successful. It really was a great team and an impressive technical feat.
In 2010, they raised $12M in their Series B at ~$100M post-money valuation. Things were looking alright.
In 2013, they raised $16.5M in their Series C, and then shortly thereafter $10M in an unusual series D. That funding round reverse-split the outstanding stock 26-to-1 and converted all existing shares, preferred or otherwise, to common stock. What was left was $10M in new preferred stock, and $20M in existing common stock! New post-money valuation: $30M. This down round ended up being a 30x dilution for existing shareholders. If you had a tenth of a percent of $100M before, now you had a hundredth of a percent of $30M. Yowza!
After that bath, the board amended the charter so they stopped mailing out these notices. I don't know what's happened since, but I'll find out soon enough.
I feel bad that the company wasn't successful. It really was a great team and an impressive technical feat.