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<[link removed]>

August 18


 



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<[link removed]>
goes up.

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More than 60,000 investors have already invested over $100 million, including
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<[link removed]>
Mode
<[link removed]>
may still be private, but the company has already secured its Nasdaq ticker:
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<[link removed]>
in 2023 by Deloitte after posting32,481% growth.

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Pre-IPO shares remain available at $0.55/share.


🚨 Get all the details here.
<[link removed]>
*Mode Mobile recently received their ticker reservation with Nasdaq ($MODE),
indicating an intent to IPO in the next 24 months. An intent to IPO is no
guarantee that an actual IPO will occur.

*The Deloitte rankings are based on submitted applications and public company
database research, with winners selected based on their fiscal-year revenue
growth percentage over a three-year period.

*Please read the offering circular and related risks at invest.modemobile.com
<[link removed]>
.

*Mode revenue and EBITDA numbers include full year revenue and EBITDA of
businesses acquired by Mode Mobile in 2025.
 

 





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THE HILL REPORT

The Headline Price Belongs to Somebody Else's Shares

Connor Hill · InsightfulWord · August 17, 2026

When a private company is described as being worth a particular amount, the
figure is almost always produced by the same arithmetic: take the price paid
per share in the most recent financing round, multiply by every share the
company has issued, and report the product.

That calculation contains an assumption which is false in essentially every
case. It assumes all shares are the same.

They are not. A late-stage private company typically has a capital structure
with several classes of preferred stock and one class of common stock, and the
preferred classes carry contractual rights the common shares do not. Applying
the preferred price to the common shares treats a senior, protected claim as
though it were identical to a junior, unprotected one — which is roughly like
valuing a company's equity at the price of its bonds.

The most rigorous public measurement of that gap comes from a study by two
finance academics who did something nobody had done systematically: they read
the charter documents. Examining 135 U.S. companies valued at a billion dollars
or more, they built a valuation model incorporating the actual contractual
terms and compared the result with the reported figures.

Their finding was that reported valuations exceeded fair value by an average of
50 percent, with fifteen companies overstated by more than 100 percent. Nearly
half the sample — 65 of 135 — would have fallen below the billion-dollar
threshold entirely once the terms were accounted for. And the common shares
specifically, lacking the protections the recent investors received, were worth
substantially less than the headline per-share price implied. The terms driving
the gap were specific and countable. Thirty-two percent of the companies had
granted the most recent investors seniority over all other investors.
Twenty-four percent had granted vetoes over a public offering below a certain
price. Fourteen percent had granted outright guarantees of a minimum return in
an offering.

None of that is hidden. It is in the charter, the certificate of
incorporation, and the stock purchase agreements — documents that are filed,
available, and read by approximately nobody outside the transaction. The reason
this has become a retail question rather than an institutional one is that the
buyer base has widened. Offerings once confined to venture funds are now
marketed directly to individuals, who typically buy a junior class and are
shown the same per-share arithmetic that produced the headline. The governing
documents exist and are furnished. Whether anyone reads the part describing
what sits ahead of them is another matter.

What follows is what those terms actually do when a company exits, why a
headline price can be simultaneously accurate and misleading, and which
questions establish where a given share class sits.

What a Liquidation Preference Does

The provision that matters most is the simplest to describe and the most
consequential in practice.

A liquidation preference entitles the holder of a preferred share to receive a
specified amount — typically the original purchase price, sometimes a multiple
of it — before holders of common stock receive anything at all in a sale,
merger, or liquidation. It exists because an investor buying into a company at
a high valuation wants protection against a disappointing outcome, and it is
entirely standard.

The consequence appears only in outcomes below expectations, which is
precisely the scenario nobody models when buying in. If a company sells for
more than the sum of all preferences, the preferences are irrelevant and
everyone converts to common and shares proportionally. If a company sells for
less, the preferences absorb the proceeds from the top, and the common shares
receive whatever remains — which can be very little, and can be nothing.

This produces a payoff structure that is deeply asymmetric between share
classes. On the upside, preferred and common perform similarly. On the
downside, preferred is protected and common absorbs the loss first. Applying a
single per-share price to both classes therefore misprices the common shares in
exactly the scenarios that determine whether an investment works.

Participation makes it more pronounced. A participating preference entitles
the holder to receive the preference amount and then share in the remainder
alongside the common, rather than choosing between the two. Where that term
exists, the common shares are diluted at every outcome rather than only at low
ones.


The Ratchet and the Veto

The second family of provisions concerns what happens if the company's value
falls, and these are the terms that most directly convert a headline valuation
into a number that cannot be relied upon.

An anti-dilution ratchet adjusts the conversion price of earlier preferred
shares if the company subsequently sells stock at a lower price. In its full
form, an earlier investor's shares convert as though they had been purchased at
the new, lower price — which increases their share count and dilutes everyone
without protection. The people without protection are the common holders.

An IPO-related protection operates at the exit. A guarantee of a minimum
return in a public offering, or a veto over an offering priced below a
threshold, gives the holder either compensation or a blocking right if the
company lists below the last private round. The academic work found the first
term in fourteen percent of the sample and the second in twenty-four percent.

The veto is the more subtle of the two and the more important structurally. A
single class of investor holding the right to block a public offering below a
specified price has effective control over whether the company can go public at
all in a weak market. That is a governance fact rather than a financial one,
and it does not appear in any valuation figure.


📈 Capital Ledger

50%

Average amount by which reported valuations of 135 U.S. companies valued above
$1 billion exceeded fair value once the contractual terms in their charters
were modeled — with 65 of the 135 falling below the billion-dollar threshold
entirely, and the most recent investors holding seniority over all others in 32
percent of cases. Source: Gornall and Strebulaev,Squaring Venture Capital
Valuations with Reality, National Bureau of Economic Research, 2017.


Support or oppose: should the preference stack be disclosed alongside any
valuation?

A company's reported valuation is calculated by applying the newest, most
protected share price to every share outstanding, including the unprotected
ones. Supporters of mandatory disclosure argue that anyone buying a junior
class deserves to know what sits ahead of it, that the information already
exists in the charter, and that summarizing it is a page of work. Opponents
answer that capital structures are genuinely complex, that a summary would
itself mislead, and that the documents are available to anyone who asks for
them. Should the stack be disclosed with the headline number?Hit reply — one
line is enough.


Why the Headline Number Is Not a Lie

It is worth being precise, because the criticism here is narrower than it is
often made.

The reported valuation is an accurate statement of a particular fact: someone
recently paid that price for that class of share. It is not fabricated and it
is not an estimate. The problem is that it is then used to answer a question it
does not address — what a different, junior class of share is worth — and the
extension is performed silently.

There are legitimate reasons it is reported that way. It is comparable across
companies, requires no assumptions, and modeling the alternative needs the
charter documents plus a valuation approach on which reasonable people
disagree. A single unambiguous figure has advantages over a modeled range.

The academic work does not argue that the reported figures are dishonest. It
argues that they are an upper bound presented as a point estimate, that the gap
between the two is large and measurable, and that the gap is largest precisely
for the companies with the most aggressive recent terms — which tend to be the
companies that raised most recently at the highest prices.


The four documents that answer the question

Anyone considering a junior share class in a private company can establish its
position from a small number of documents, all of which a company either
publishes or will provide on request. The certificate of incorporation, as
amended, sets out every share class and the rights attached to each — this is
where liquidation preferences, participation, seniority and conversion terms
live. The capitalization table shows how many shares of each class exist, which
determines how much sits ahead of the common. The offering circular or private
placement memorandum discloses the terms of what is being sold and, in a
regulated offering, carries required risk disclosures. And any stockholders
agreement sets out transfer restrictions, rights of first refusal, and
drag-along provisions that determine whether a holder can sell at all before an
exit. The specific questions worth answering are: what is the total liquidation
preference ahead of this class, is any of it participating or a multiple, and
at what sale price does this class begin to receive anything. That last figure
is a single number, it is computable from the documents, and it is the most
informative fact about any junior private holding.


Whether the Share Can Be Sold at All

Alongside the question of what a junior share is worth sits a second one that
determines whether the first ever becomes relevant: can it be sold, and to whom.

Private company shares are not freely transferable, and the restrictions are
contractual as well as regulatory. A right of first refusal requires a holder
wishing to sell to offer the shares to the company or to existing investors
first, at the proposed price, which in practice deters most buyers from making
an offer at all. Outright transfer restrictions may require board consent.
Drag-along provisions can compel a minority holder to participate in a sale
approved by a majority, on terms the minority did not negotiate.

Layered on top are the securities law constraints on resale of unregistered
securities, which restrict who may buy and when. Shares acquired in certain
exempt offerings carry holding periods and conditions before any resale is
permitted.

Secondary marketplaces exist and have grown, but they operate under the same
restrictions, concentrate on a few well-known names, and price off thin,
episodic trading rather than a continuous market. A holder in a company without
an active secondary market has an asset that converts to cash only at an exit
controlled by others.

That is the part worth establishing before purchase rather than after. The
specific questions are whether a right of first refusal applies, whether board
consent is required to transfer, whether any holding period runs from the date
of purchase, and whether any secondary venue actually quotes the security. Each
has a documented answer, and the combination determines whether the position is
an investment with an exit or a commitment for an indefinite period.


What Changes at a Public Listing

The reason all of this concentrates attention on the exit is that a public
offering typically resolves the entire structure at once.

In a conventional listing, all preferred classes convert into common stock,
the preferences extinguish, and everyone becomes a holder of the same
instrument. That is why an offering above the last private round makes the
structural questions moot — the protections were never triggered and every
class converts proportionally.

An offering below the last private round is where the structure becomes
visible. Ratchets adjust conversion ratios in favor of protected investors,
guarantees are satisfied, and the common shares absorb the difference. The
identical listing produces materially different outcomes for different classes,
and the class most affected is the one with no protections.

This is also why a listing is not automatically the event that junior holders
are waiting for. The relevant question is not whether a company lists but at
what price relative to the round that set the reference, and that comparison is
available to anyone holding a junior class only if they know what the reference
was and what sits above them.

Fifty percent, on average, across 135 companies whose charters were actually
read. That is the size of the gap between the number reported and the number
the documents support — and the gap is concentrated in exactly the share class
that is easiest to buy.


The bill, not the debate

Most discussion of a private company concerns the business, the growth, and
the price per share, which is the information a seller supplies and the
information a buyer finds intuitive. The determining fact for a junior holder
is the sale price at which their class starts receiving money, and it is
computable from documents that already exist. For any private share you hold or
are considering, do you know what stands ahead of it in line?Connor Hill reads
every reply.


Sources checked: National Bureau of Economic Research — Gornall and Strebulaev,
Squaring Venture Capital Valuations with Reality, Working Paper 23895
<[link removed]> · Journal of Financial Economics — Gornall
and Strebulaev,Squaring venture capital valuations with reality
<[link removed]> ·
U.S. Securities and Exchange Commission —Investor Bulletin: Private Placements
Under Regulation D
<[link removed]> ·
U.S. Securities and Exchange Commission — Regulation A offering circular
requirements and Form 1-A
<[link removed]> · U.S. Securities and
Exchange Commission —Investor Bulletin: Pre-IPO Investing
<[link removed]>
·U.S. Securities and Exchange Commission — EDGAR full-text search for charter
documents and offering filings <[link removed]>


Connor Hill · InsightfulWord





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