🪴 Ziyun's Backyards

Recent Notes

See 25 more →

Y Combinator

1 min read

Terminology

  • MFN: Most Favored Nation: giving the company money now but at the terms you will negotiate with other investors later (i.e. at the best valuation possible)
  • DPI: distributed to paid in capital ratio; DPI = Cumulative Distributions / Paid-In Capital
  • RVPI: residual value to paid-in capital; RVPI = Residual Value / Paid-In Capital)
  • TVPI: total value to paid-in; TVPI = DPI + RVPI
  • IRR: internal rate of return

The Y Combinator deal1:

The $125k safe and the MFN safe will each convert into preferred shares when your company raises money by selling preferred shares in a priced equity round, which we refer to below as the “Safe Conversion Financing” (this will typically be your “Series A” or “Series Seed” financing, whichever happens first).

My napkin calculations estimate @ycombinator’s DPI (distributed to paid in capital ratio) for their 2005 - 2013 vintages at ~320x.2

Footnotes

  1. https://www.ycombinator.com/deal “The Y Combinator Deal” ↩

  2. https://threadreaderapp.com/thread/1559810674364121090.html ↩

Graph View