Questions from Monkey

Hi everyone,

I am a sophomore who will be interning at a local no-name-IB boutique over the summer. I talked to some folks to get a sense of the experience/deal and raised a few questions.

1. Private placement means that a private company sell its securities in exchange of funds. Does it matter if the company is a start-up/pre-revenue company? I know that private firms typically have shares, but what about start-ups? And how do private companies typically determine their share numbers?

2. A folk that I spoke to said that the firm recently closed a capital raising deal for a start-up client, but the structure is beyond my understanding: the company will get funded by a PE firm, and the PE firm receives equity interests, but is also guranteed to get the full principal payback at certain periods in the future and is ranked as the most senior "lender", but no interest payment. I was confused. Is this common? If so, what does it call?

3. Valuation of pre-revenue company? My $0.02 would be 1) qualitative factors (founding team, intellectual property, assets if any), 2) market outlook (competition, size, growth). Anything else?

Some questions may sound stupid, but I appreciate any helps!