james_alonso

This depends on how the liquidation preference is structured. Sometimes each new Series is made more senior than the prior series, so the last money in gets paid first - in that case if the last investor put in $100m they would get it all out before any of the other investors got paid. In other cases, the different series of preferred stock have a "pari passu" preference, meaning they all have equal priority - so in that case, you'd calculate each investor's liquidation preference as a percentage of the total liquidation preference owed to all investors, and they'd split the available proceeds according to that percentage.

but in the worst case with the convertible note, the investor gets their money back.

and often but not always, the note will also provide that if the note matures hasn't been a QFE, then the note can convert into common stock.

Right, employees are getting common stock so they don't get to jump to the front of the line when a company is sold. But they are also paying the common stock price, which is a fraction of the price paid by the preferred stock, so it makes sense that each share they own has less rights associated with it vs. the shares the investor pays a premium for.

Small thing, but it would be a big help if you could expand the font choices for your template maker - I could definitely see myself using this but would need to be able to drop in text in Times New Roman.

He's talking about early-exercise stock options vs instalment exercise stock options. Early-exercise let's you exercise the shares from day 1, before they're vested. It starts the clock running on long-term capital gains treatment, so you're more likely to qualify for that lower rate than if you exercise later.

You do have to pay for the shares out of pocket though so it's a risky move - could end up having paid cash for worthless shares, especially in an early stage company.