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Vamshi Yadav
ย โขย
SucSEED Venturesย โขย 22d
The Falsehood of Distributions of Founders at Distress Exits: A Lesson for BluSmart Worth โน850Cr Let's dispel one myth: "Founders make money in acquisitions. Reality Check of BluSmart Raised: ~โน1,300Cr | Last Val: โน2,700Cr | Exit Val: ~โน850Cr Outstanding Debt: โน100Cr+ (bonds due soon) Liquidation Stack: 1x pref for investors + venture debt Why Founders Won't See โน255Cr โคท Investors Get Paid First Eg: 1x liquidation preference = Investors reclaim their โน1,300Cr before anyone else โน850Cr exit? Not even enough to cover investor capital (let alone debt) โคท Debt Eats the Rest Bonds, working capital loans, leases = another โน100Cr+ Net Result? ZERO for common shareholders (founders/ESOPs) The Hard Truth of Distress Exits They are not mostly "exits" but clean-up operations: โคท Investors salvage what they can โคท Debtors scrap it out for what little is left โคท Founders? Bitter, with often only diluted stakes and lessons Key Takeway: Next time you hear "X startup sold for $Y," ask: Whatโs the cap table stack? (Prefs, debt, etc.) Is this a win or a wipeout? Because in venture, valuation โ payout. #StartupTruths #VentureCapital #FounderMyths
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