Duration: 21:00
PART 1 — Analytical Summary 🚀
Context 💼
In “Valuation: how legal can help” (21 minutes), Alexandon Pastor Majon, a lawyer at DI Legal, outlines how legal tools can de-risk and streamline startup valuation negotiations. Drawing on findings from DI Legal’s Scaleup Confidence Survey 2025—where funding confidence is rising but valuation concerns remain pronounced—he notes that nearly 30% of respondents see the current economic climate significantly pressuring valuations. With founders and investors often viewing risk and potential through different lenses, legal mechanisms become pivotal in bridging valuation gaps without stalling growth.
Core ideas & innovations 🧠
Majon explains why valuation matters beyond a headline number: it determines dilution and bargaining power, shapes governance and investor rights, establishes precedent for future rounds, signals market credibility, and encapsulates the value of intangible assets (IP). Yet early-stage companies frequently lack revenue, run at a loss, have short track records, depend heavily on financing, and present illiquidity for investors—making valuation an inherently subjective exercise influenced by narrative, team strength, bargaining dynamics, and return expectations.
To reconcile the classic founder–investor divergence (“we’re ready to scale” vs. “the hardest part is still ahead”), he presents three legal instruments:
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Convertible Loan Agreements (CLAs): A loan converts into equity at a future trigger (e.g., next equity round or exit), deferring the valuation decision. The conversion applies the future round’s valuation with a discount to compensate early risk. In today’s market, CLAs are popular as bridge financing—often with investor-favorable terms such as discounts up to 30%, interest rates seen as high as 13%, non‑subordination, and investor option to convert.
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Value Adjustment Warrants (VAWs): Warrants that correct the effective pre‑money valuation based on milestones, aligning outcomes with performance. Variants include founder warrants (positive adjustment), investor warrants (downside protection), and IP contributor warrants. Example: if a founder accepts a lower pre‑money valuation (1M) but earns founder warrants that vest upon a six‑month product launch, successful execution can boost the founder’s ownership to the level implied by a 2M pre‑money—retrospectively validating the founder’s confidence while reassuring the investor with milestone‑tied risk control.
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Liquidation Preference (LP): A priority right on exit proceeds for preferred investors. Key dimensions are the multiple (e.g., 1x, 1.5x, 2x) and whether the preference is participating (investor gets the multiple plus pro‑rata on the remainder) or non‑participating (investor chooses either the multiple or pro‑rata). LPs can materially shift economics: investors may accept higher valuations if they receive stronger LPs that secure downside protection. Market trends: limited LP in seed rounds; more common in Series A–C; drift toward non‑participating preferences; multiples often above 1x (e.g., 1.5–2x).
He concludes with a practical reminder from Q&A: CLAs are easy and cost‑efficient to implement (contractual, no notary or special reports), but their attractiveness depends on negotiated terms—high interest or steep discounts can outweigh the convenience.
Impact & takeaways ⚙️💬
This talk reframes valuation as a package of economic terms rather than a single price tag. CLAs can buy time and keep momentum when round timing is uncertain. VAWs align upside with execution, letting both sides “price risk” with data and milestones. Liquidation preferences hedge investor downside while enabling founders to preserve headline valuation. Founders should assess total deal economics—discounts, interest, LP structure, and participation—because they ultimately determine dilution and exit outcomes. In tighter markets, investor‑leaning terms are more common; disciplined negotiation anchored in milestones and clarity can still create win‑win structures.
PART 2 — Viewpoint: Odoo Perspective
Disclaimer: AI-generated creative perspective inspired by Odoo's vision.
At Odoo, we’ve always believed that simplicity wins. These legal mechanisms—convertibles, milestone‑based warrants, and clear liquidation preferences—are really about reducing ambiguity so teams can focus on building. When expectations are explicit and instruments are transparent, founders spend less time arguing about numbers and more time delivering value.
Startups thrive when their tools, processes, and agreements integrate cleanly. The best financing structures feel “modular”: you plug in milestones, you see the effect on ownership and incentives, and you keep moving. That’s the same spirit we apply to software—remove friction, make outcomes visible, and let communities and teams iterate quickly with confidence.
PART 3 — Viewpoint: Competitors (SAP / Microsoft / Others)
Disclaimer: AI-generated fictional commentary. Not an official corporate statement.
The mechanisms discussed are well understood in venture finance, but their real challenge emerges at scale: governance, auditability, and compliance. As companies mature—or operate across multiple jurisdictions—controls around capitalization tables, milestone evidence, and waterfall modeling must be robust. Enterprises will demand end‑to‑end traceability, standardized reporting, and integration with financial close processes.
UX differentiation matters, but deep enterprise depth is decisive. Organizations evaluating these instruments should ensure their systems can handle cap table versioning, IFRS/GAAP implications, and scenario analysis while maintaining strong internal controls. The winners will combine intuitive experiences with scalable compliance frameworks that satisfy auditors, boards, and regulators.
Disclaimer: This article contains AI-generated summaries and fictionalized commentaries for illustrative purposes. Viewpoints labeled as "Odoo Perspective" or "Competitors" are simulated and do not represent any real statements or positions. All product names and trademarks belong to their respective owners.