In this first of a two part AlphaTakes video series, Matt Storms discusses the first half of the Series A Preferred Stock term sheet for an emerging technology company.  He provides a summary of some of the key terms of the Series A term sheet, using National Venture Capital Association (“NVCA”) model document.

Here are the key takeaways from this video:

1. The NVCA documents are great resources for understanding the Series A financing, but are fairly investor friendly.
2. Typical preferred stock dividend provisions alternatives include the following:
   • If and when paid to the common stock
   • Accruing and cumulative
   • If and when declared by the board
3. Most common preferred stock liquidation preferences alternatives include the following:
   • Non-participating preferred
   • Participating preferred
   • Participating preferred with a cap
4. Preferred stock typically includes special voting rights, such as designating one or more members to the company’s board of directors and veto rights over certain company actions.