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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. Term Sheet Overview : The second most important economic term in the term sheet other than price is “liquidation preference.&# Those were the dog days of entrepreneurship.

Valuation 405
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Bad Notes on Venture Capital

Both Sides of the Table

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

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Bad Notes on VC

Gust

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. But how do I offer cheaper prices to early investors?”

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Working for Equity Instead of Cash

genylabs.typepad.com

Before you agree to take equity in lieu of cash, you need to understand that any individual early stage start-up company equity is most likely going to be worthless. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. what your rights are.

Equity 40
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Should Founders Be Allowed to Take Money off the Table?

Both Sides of the Table

A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal. In my first company I had to raise money in April 2001 or die. I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually. I believe this is wrong.

Founder 329