To answer your question: I don't know. But I imagine if it became common not to have, valuations would be adjusted accordingly to price in the risk.
Which makes me wonder, if a company raises $1mil (1 million shares, $1/share) @ $9mil pre-money, that means the investors get 10% or, say, 1mil/10mil shares. But is it really fair to extrapolate that 10% ownership for $1mil means the whole thing is worth $10mil, given the significantly different provisions (ratcheted anti-dilution, pro rata/drag along rights, information rights, liquidation preference) their shares tend to have over common?
Maybe the SV convention of treating all shares as equal when talking about valuations should be examined more closely.
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To answer your question: I don't know. But I imagine if it became common not to have, valuations would be adjusted accordingly to price in the risk.
Which makes me wonder, if a company raises $1mil (1 million shares, $1/share) @ $9mil pre-money, that means the investors get 10% or, say, 1mil/10mil shares. But is it really fair to extrapolate that 10% ownership for $1mil means the whole thing is worth $10mil, given the significantly different provisions (ratcheted anti-dilution, pro rata/drag along rights, information rights, liquidation preference) their shares tend to have over common?
Maybe the SV convention of treating all shares as equal when talking about valuations should be examined more closely.