Both Sides of the Table

MAY 23, 2010

The industry jargon for convertible debt is a “bridge loan&# or “bridge financing.&# It’s called a bridge loan because it’s meant to provide enough capital to bridge you from your last round of funding until your next round of funding. They might not replace an engineer or two that quits.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

Professor VC

APRIL 7, 2011

The arguments for convertible debt are that it is quick, easy and cheaper to get a financing done. There isnt a need to negotiate a number of terms in standard preferred financing documents and legal fees will be less. In cases where it is truly a bridge financing (i.e. So when does convertible debt make sense?

San Jose 36

San Jose Technical Review Angel Investor Valuation 36

The Startup Lawyer

FEBRUARY 4, 2011

As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity. If the terms won’t hinder a future financing, then your startup is good to go. 3) Research the Mentors. Conclusion.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

ithacaVC

FEBRUARY 20, 2011

It may explain why Fund Y tries to protect itself, via deal terms, from pay to play provisions that would kick in with respect to future financings. Fund Z may not be a typical VC, but rather part of a larger organization whose underwriting criteria require the onerous terms in the given situation.

Bridge Financing 40

Bridge Financing IPO Pay to Play Finance 40

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 Magazine

OCTOBER 27, 2019

And while a lot of advice for start ups focuses on how to get that crucial initial funding, there isn’t nearly as much information about a secondary but no less serious issue that many start ups face: bridge funding gaps. What is a Funding Gap?

Institutional Investors 61

Institutional Investors Startup Security Finance 61

Both Sides of the Table

MAY 15, 2010

In terms of topics we spoke about: - Do VC’s send your presentations around to other people if they don’t fund you? Often times when companies raise “bridge” financing (this is money from internal investors. Next Wednesday we’ll have Dana Settle of Greycroft Partners, a New York / LA early-stage venture capital fund.

Stealth 285

Stealth SEC Advertising Accredited Investor 285

Startup Company Lawyer

JANUARY 11, 2010

After completing a lot of convertible debt deals over the last year on behalf of both companies and investors, I have refined some of my thoughts about pre-Series A convertible debt terms. Observation 1 — Convertible debt is a bad deal for angel investors. a price cap).

Angel Investor 39

Angel Investor Valuation Bridge Financing Preferred Stock 39

venturehacks.com

OCTOBER 21, 2010

Later that evening you review the term sheet from Blue Shirt. 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.&# Or we can just do 10% standard terms. share: $8M pre-money ÷ 6M existing shares = $1.33/share.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68