VC restructuring is the specialized practice of restructuring venture-backed companies — addressing their unique capital structure, preferred equity dynamics, and stakeholder incentives distinct from conventional corporate distress.
At CRAGSI, we define VC restructuring as the specialized practice of restructuring companies financed by venture capital — and subject to the unique capital structure, stakeholder dynamics, and operational characteristics that distinguish venture-backed distress from conventional corporate distress. VC restructuring requires a fundamentally different approach because the tools, parties, and incentive structures are different.
The capital structure of a VC-backed company is dominated by preferred equity, not debt. VC restructurings often involve conflicts between preferred shareholders (who hold liquidation preferences ranking ahead of common) and common stockholders (founders, employees, angels). Understanding the waterfall — how proceeds are allocated across different series of preferred and common stock — is essential to any realistic assessment of options.
CRAGSI has built a practice specifically around VC restructuring, combining institutional investment management expertise with the operational and legal tools required to navigate the startup ecosystem's unique distress dynamics. We have executed VC restructurings involving full strategic pivots (transforming a synthetic biology company into an AI platform), runway extensions enabling Series B closings, and structured sales preserving going-concern value for all stakeholders.
Related CRAGSI services: Turnarounds & Restructurings · Workouts · Valuations