Dividends
I recently had occasion to look back through the data we have gathered on the presence (or absence) of cumulative accruing dividends in New England transactions and noticed what appears to me to be an interesting pattern. According to our research, 55% of Series A transactions had cumulative accruing dividends ranging from 6% to 10% per annum (and, obviously, 45% did not have such dividends). But, only 33% of Series B and later round transactions had these dividends (and the rates ranged from 6% to 8%). So, 67% of later round financings did not carry dividends. The sample is small (covering under 100 transactions) but it is somewhat random and covers 2008 and the first quarter of 2009. So, maybe the results are just random. It seems odd that Series A deals are more likely to carry dividends than later stage deals. I am not sure what the reason could be, if the results of our survey reflect a trend. One possibility is that Series A deals are riskier than later deals and investors are trying to gross up their yield.
