Pay-to-Play

Definition

A pay-to-play provision penalizes investors who do not participate in a future financing, typically converting their preferred stock to common or stripping protections.

Wie es im Fundraising vorkommt

Pay-to-play appears in tough markets and recapitalizations to force insiders to keep supporting the company or lose their privileges.

Häufig gestellte Fragen

Is pay-to-play good or bad for founders?

Often good: it pressures investors to fund the company in hard times and cleans preference stacks of non-supporting holders.

When do pay-to-play terms appear?

Mostly in down rounds and restructurings, where new money demands that old money commit or step aside.

Verwandte Begriffe

Down RoundRecapitalizationPreferred Stock

Setzen Sie diesen Begriff ein

Definitionen gewinnen nur dann Verhandlungen, wenn Sie sich in einer befinden. Finden Sie die Investoren, die Ihre Phase finanzieren, und beginnen Sie das Gespräch.

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