Up and Running

SEPTEMBER 19, 2017

Capital investments are like gasoline on a startup business’s metaphorical fire. If you’re like most startup CEOs, your startup has been your personal fiefdom and baby. Under that scenario, the same $500,000 is only worth a 10-ish percent stake in the business, and the founder can retain far more control in the entity.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Steve Blank

APRIL 10, 2019

VC’s have just changed the ~50-year old social contract with startup employees. In doing so they may have removed one of the key incentives that made startups different from working in a large company. For most startup employee’s startup stock options are now a bad deal. Why Startups Offer Stock Options.

Stock Options 334

Stock Options Stock Vesting Common Stock 334

Both Sides of the Table

APRIL 14, 2010

If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. I used to think a valuation was kind of like a stock price of a public company.

Finance 205

Finance Silicon Valley Valuation Startup 205

Steve Blank

OCTOBER 24, 2017

Why do these founders get to stay around? Because the balance of power has dramatically shifted from investors to founders. — Unremarked and unheralded, the balance of power between startup CEOs and their investors has radically changed: IPOs/M&A without a profit (or at times revenue) have become the norm. .

Founder 252

Founder Technical Review CTO Hire IPO 252

Startup Professionals Musings

SEPTEMBER 26, 2015

Perhaps they're way off in their valuation (usually far too high), or paralyzed by fear at seeing the other terms, because they have no idea what's normal, and what's worth a fight to the death (their startup's). In very early startups, which have no valuation, the term sheet may specify a convertible note.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

Up and Running

AUGUST 17, 2015

As I read stories of college dropouts who had successfully sold tech companies, or entrepreneurs with innovative ideas who made it big on Shark Tank, it became clear that there was no set path to startup success. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on).

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Startup Company Lawyer

AUGUST 31, 2012

Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds. However, most typical convertible debt issued by startups have a maturity date of typically one year or later from the time of issuance. Background.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. has now employed the same strategy.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

www.inc.com

SEPTEMBER 24, 2011

Advisor. ); STARTUP. Dave Graham Business Venture Capital Private Equity GlobalLogic Inc. Venture Capital Firms. Last spring, Dave Graham , founder of software consulting firm Arizona Bay, learned that a major client, Jumpstart Automotive Media, had been acquired for more than $80 million. Tools & Research.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). If you don’t, please educate yourself on this site, Venture Hacks and the term sheet series by Brad Feld/Jason Mendelson, among other places. under $500K). Legal fees.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. Sometimes the consultant has a reasonable basis to think this, since lean startups are programmed to get things for free and may call on the consultant from time to time for free advice. Venture Capital.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

ReadWriteStart

MAY 8, 2012

Approaching investors for the first time is a daunting exercise for any startup. Regardless of whether you’re raising venture capital, approaching angels or still trying to figure out where to get started, it’s critical to stay level-headed about what you’re really pitching - and what it’s actually worth.

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.]

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Scott Edward Walker

APRIL 9, 2012

Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. and (iii) what securities laws do founders need to worry about in connection with the issuance of convertible notes?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Scott Edward Walker

JUNE 9, 2019

Accordingly, I thought it would be helpful for founders to discuss these rights and to point out the problems they create for startups. This is a huge red flag and founders should push back very hard. In short, super pro rata rights are another example of investors trying to take advantage of inexperienced founders.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

blog.simeonov.com

FEBRUARY 22, 2010

I have been thinking a lot recently about how to apply agile development principles to investing and key aspects of startup development such as team building. The first post is about agile startup fundraising. The follow-on post is about agile startup team building. All founders have the same agreement. Urban legends.

Founder 44

Founder Vesting Agile Startup 44

Growthink Blog

APRIL 7, 2010

million from three individual angel investors and one early-stage venture capital fund. For those of you who don't understand the term "Series A," the Series A round is the name given to your first significant round of venture financing. read more.

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Haystack

JULY 8, 2018

And with this, every year, a new cohort enters into the “tech startup” world, and there’s no official canon to read, no “one-stop shopping” site or user manual to get briefed on the things you absolutely need to know. You can read more about the types of stock granted in startups here.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell. So during this round, you'll be testing what works and what doesn't.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

K9 Ventures

MAY 14, 2011

The companies go through a 3-6 month long startup bootcamp and then typically try to raise angel/seed funding. Angels : Angels are individual investors, who are investing their own capital and doing so on a part-time basis. At first blush, uVCs acting more like institutional venture capital funds may be considered a bad thing.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. That is obviously a challenge for the typical cash-strapped early stage startup that is seeking to raise more capital and is not in any kind of position to be repaying loans. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? November 2005 Venture funding works like gears. A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. Apply for funding by March 3.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

ithacaVC

FEBRUARY 23, 2011

The MCOP can serve a critical role as founders and other management team members are diluted down by rounds of financing or if their equity is not in the money. The more the company raises the higher the ALP, and thus the higher the hurdle before the common stock held by founders and stock options held by other employees are in the money.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

Professor VC

JULY 25, 2013

Mike Markkula presenting Steve Jobs with first investment in Apple I recently watched an excellent documentary on PBS, Something Ventured: Risk, Reward, and the Original Venture Capitalists. Startup outcomes tend to be very binary. Angel Investors Silicon Valley term sheets venture financing venture capital'

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

K9 Ventures

OCTOBER 19, 2015

Note: If you’re a founder, stop reading this post now. If you’re even remotely connected to the “industry” of Venture Capital, you need to read Howard Marks’ It’s Not Easy memo. If you build a good company, investors will hunt you down.

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

Gust

OCTOBER 3, 2011

For a first time entrepreneur trying to figure out the arcane world of startup financing, it can be very confusing to understand the roles that different types of investors play in funding promising companies, as well as the point in a company’s life at which they enter the stage. From +/- $1.5m

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Professor VC

MARCH 12, 2015

The above was the opening salvo of a controversial tweetstorm yesterday by my former student and 500 Startups founding partner, Dave McClure (full venom below). As with all M&A exits, there was a round of congratulatory messages to the founder in the Silicon Valley echo chamber.

Syndicate 28

Syndicate Syndication Silicon Valley Common Stock 28