Feld Thoughts

SEPTEMBER 9, 2015

Some will demonstrate strategically justifiable metrics and have fantastic ‘up round’ exits; others may see liquidation preferences kick in which will negatively impact founders and employees; others may fulfill the adage “IPO is the new down round” , which has been the case for more than half of the public companies on our list.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

Both Sides of the Table

FEBRUARY 8, 2016

The startup industry may be “resetting,” which doesn’t mean a “crash” but rather just a resetting of valuations, timescales, winners/losers, capital sources and the relative emphasis of growth rates vs. burn rates. Don’t assume that you can “just do a down round” if necessary.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) And most startup code and features end up on the floor as customers never really wanted them.

Lean 244

Lean Silicon Valley Startup RSS 244

abovethecrowd.com

APRIL 20, 2016

The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate. Layoffs have also become more prevalent.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Genuine VC

FEBRUARY 9, 2011

The timing of the last round is also important - the closer you are to joining a company in conjunction with a financing event, the more recently validated it is by a professional investor – but also the value of your financial upside is less. What is the burn rate and how much cash is in the bank now?

Startup 146

Startup Burn Rate Technical Review Down Round 146

Both Sides of the Table

FEBRUARY 14, 2016

Huge funding increases lead to massive wage inflation, rent inflation and thus higher burn rates. Why Down Rounds are Harder Than You May Think. Down rounds are hard. A slight down round is achievable but massive “hair cuts” are very hard to do.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

MARCH 30, 2016

We had grown into a more reasonable burn rate so raising capital meant we would have many years of cash on the balance sheet. Luckily we were never a unicorn so we didn’t have to have a destructive massive down-round that makes it harder (but not impossible) to get done. Some startups will have a hard time reorienting.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

This is going to be BIG.

MARCH 3, 2019

Funds that lead Series A, B, and C rounds have serious capital needs. They’re not only leading larger rounds, but may need to bridge companies they’ve otherwise made large investments into that have higher burn rates. It doesn’t take into consideration options, down rounds, or recaps.

Portfolio 110

Portfolio Burn Rate LP Distribution 110

Both Sides of the Table

JUNE 5, 2016

If a company raised a big B and/or C round and needs more money the late stage guys have the bucks and that early-stage guys often don’t. So in companies with high burn rates you can find the following: Seed funds wanting to sell the company / get a return or growth investors pushing for a recap or massive down round.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

www.paulgraham.com

APRIL 28, 2010

When you have a high "burn rate," youre alwaysunder time pressure, which means (a) you dont have time for yourideas to evolve, and (b) youre often forced to take deals you dontlike. 10 ]One new thing the company might encounter is a downround , or a funding round at valuation lower than the previousround.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76