If your company is not doing well over time, there is a good chance the common stock is approaching $0 value. The longer this goes on, the more certain you can be.
If you get a sense of deja-vu every time a C-level at an all hands says "next year we'll be profitable" , "we just need this funding round, and then" "we missed revenue targets this quarterb but" etc. then you are probably there already, or nearby.
There are exceptions of course, sometimes a rough patch is just a rough patch.
Yep, I've had this happen. The "rough patch" has been going on for years, with down round after down round. At some point, you have to accept it's not working out.
Totally missed this 10 days ago, but here are some things to consider based on my experience.
Look at their funding. Not always bad, but have they taken a bridge round (something to keep them afloat while they get a bigger round together).
Did they have a down round i.e. valuation stayed flat or went negative after they took more money. This almost always dilutes common stock way more then preferred stock and VCs usually have preferred. They often re-cap in this case as well (change the terms of the cap table). Basically any time VCs have the upper hand they will dilute common stock holders.
Really, don't expect to get any meaningful amount of money unless the company sells for way way more than they raised or if the company goes public and the only way you're going to make the big bucks is if the company sells for a huge multiple while they are relatively small or goes public.
Intransparency and closed rooms. Financing rounds with undisclosed value, less or equal to the last round. Financing rounds that are less than 3x of the last one. Too many financing rounds with slowing growth. Growth of less than 50% per year. Hiring Freezes. Founders leaving. None of this is a hard criterion, but more than one of them and the chances of your equity being worth something quickly appoaches zero.
