Federation's Sendle deal draws intense VC scrutiny as fresh terms offered
A funding round for delivery startup Sendle has sparked concern among early stage VCs and angel investors.
This week, delivery startup Sendle contacted its existing investors offering them the opportunity to tip fresh funds into the company amid a recent funding round led by private equity outfit Federation.
"[T]he revised terms provide a compelling opportunity and incentive for existing shareholders to participate in the round with a 8X liquidity preference afforded to new investment," said the message, viewed by Capital Brief.
The terms of the proposed deal — specifically the eight times liquidation preference — have surprised the company's earliest backers and caused alarm across the early stage and angel investment communities.
While liquidation preferences — which provide protections for investors backing startups — are a common feature in venture capital funding rounds, an eight times return is considered highly unusual in the Australian market. Early stage VC sources described it as "bonkers", "unprecedented" and “really quite distressing.”
