Suppose a startup is looking to raise capital for a

Suppose a startup is looking to raise capital for a growing tech company. The founders are presented with term sheets from two different venture capital firms. The following highlights contain the main details and terms contained within each potential deal structure.

Investor A

Investment amount: $4,000,000

Investors: Investor A

Type of Security: Non-Participating Preferred Equity

Postmoney Valuation: $9,000,000

Option Pool: 25% of post-money value

Liquidation Preference: 1X

Anti-dilution: Weighted Average

Board Structure: Board of 3 members; Investor A holds 1 seat

No Shop Clause: 30 days

Investor B

Investment amount: $6,000,000

Investor Split: $3,000,000 by Investor B and $3,000,000 by Investor C

Security Type: Participating Preferred Equity

Premoney Valuation: $6,000,000

Option Pool: 15% of postmoney value

Liquidation Preference: 1X with 2.5X participating cap

Anti-dilution: Full Ratchet

Board Structure: Board of 3 members; each investor holds 1 seat

Pay-to-play: All investors required to purchase shares during any future down round or forfeit board seat

No Shop Clause: 6 weeks

Suppose the company does not do great in the near future and has to raise funds again but at lower valuations. How will the founders fare under each term sheet scenario?