Both Sides of the Table

SEPTEMBER 18, 2014

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. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

SEPTEMBER 29, 2011

The most successful serial entrepreneurs in the world may found three or four, perhaps even eight or ten venture-backed startups over the course of their careers. 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.

Finance 178

Finance Term Sheet Preferred Stock Bridge Financing 178

cdixon.org

AUGUST 3, 2012

Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. Some observations: - Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months. Hence, many early-stage consumer startups are switching to transactional models. -

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

Gust

SEPTEMBER 17, 2014

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. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Professor VC

APRIL 7, 2011

This will also serve as a good pointer for all the entrepreneurs who ask why I am not interested in their company led convertible note financing round. In a convertible note structure, Im penalized for increasing your valuation. In a convertible note structure, Im penalized for increasing your valuation.

San Jose 36

San Jose Technical Review Angel Investor Valuation 36

K9 Ventures

MARCH 23, 2011

I may be well be in the minority in the Valley to think this way — especially so as a seed stage investor — but I have a strong preference for doing priced equity rounds for funding companies at any stage. Since the financing would likely happen in short order, there was no need to have a valuation cap in the note.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Both Sides of the Table

MAY 23, 2010

This happens when the company has been making steady progress but hasn’t built enough “ proof &# to raise its next round of financing from external investors. a loan) that is later converted to equity at the time of the next financing. So my view is that VCs and entrepreneurs need to make tougher choices.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290