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- No Bargains on Your Equity! Part 1: Maximise carry or valuation?
No Bargains on Your Equity! Part 1: Maximise carry or valuation?
Alex Prokofjev
July 10, 2023
A lot of our readers are fundraising right now. Predictably, structuring, and the slice of the pie available for the founders, comes up in every conversation. We can see why. As we established in previous articles, most VCs struggle to get their heads around the HoldCo / rollup model. And yet they are essential providers of early stage equity capital.
How is an independent rollup supposed to raise without excessive dilution? Turns out there are quite a few options, which we examine below in this two-part series.
In Part 1, we compare the two most common structures: the “VC” one and the “PE” one.
In Part 2, we review alternative structures including: Search Fund; SPAC / RTO; Fund Structure; and Deal-by-Deal.
Let’s tuck in!
The “VC Structure”
Out of all the reasons why serial acquirers voluntarily opt for the brain damage of negotiating pre-money valuations, only one is legitimate in my opinion: MONEY.