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Bryan Lee

Krishi Star


Am looking for feedback on potential pros/cons of an investment proposal that we have received from a group of investors (syndicated seed round). Basics of the proposal are as follows:
  1. They give us the investment in series of tranches
  2. Release of tranches based on agreed upon milestones
  3. Exact Valuation of equity to determine investor stake is delayed for 2 years. Instead an upper and lower limit to the valuation is given
  4. Milestones are set for the end of the 2 years. The milestones we hit determines the valuation (the more we hit, the higher the valuation). If we hit no milestones
  5. Exact instrument of the investment would be CCPS (Compulsorily Convertible Preference Shares). This would capture the base and maximum valuations in the agreement. Based on milestone performance, conversion ratio of each preference share to equity share varies (e.g. :1 (in the best case) to 1:5 (in the worst case))
Thank you!