Gust

SEPTEMBER 29, 2011

It should therefore come as no surprise that an asymmetry of information exists, mostly gleaned from experience, between founders and investors in a venture financing deal. The first is that they are the easiest deals to bang out quickly and cost-effectively, keeping the amount of legal work and negotiation on both sides to a minimum.

Finance 178

Finance Term Sheet Preferred Stock Bridge Financing 178

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. There are a million ways to do quick, easy, low-cost rounds with prices. These are all real conversations.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. There are a million ways to do quick, easy, low-cost rounds with prices. These are all real conversations. There were no metrics.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

The Startup Lawyer

FEBRUARY 4, 2011

Thus your startup needs to determine the intangible value offered by the incubator (and yes, a $150,000 convertible note with no cap and no conversion discount qualifies as an intangible). Like any issuance of stock or investment, one of the main things a startup should be concerned with is: Is this going to fuck up a future financing ?

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# If you don’t keep your eyes on the option pool, your investors will slip it in the pre-money and cost you millions of dollars of effective valuation.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68