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

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   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

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. Myth #3: Take the Highest Valuation You Can Get. Who is in your tribe?

Finance 205

Finance Silicon Valley Valuation Startup 205

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Growthink Blog

JANUARY 24, 2011

I get the same question a lot from entrepreneurs raising equity capital (venture capital or angel funding). The question is whether they need to issue common or preferred stock. The answer depends on how and what rights are defined in the preferred stock.

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

www.inc.com

SEPTEMBER 24, 2011

Why Arizona Bay started taking stock from its customers instead of cash. Dave Graham Business Venture Capital Private Equity GlobalLogic Inc. Venture Capital Firms. In the past few years, hundreds of small companies have been snatched up by private equity firms willing to agree to ever-rising valuations.

Arizona 40

Arizona Equity Iowa Venture Capital 40

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

Startup Company Lawyer

MARCH 14, 2010

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. If you really want to understand the nuances in venture capital financing documents, please review the NVCA model venture capital financing documents. . under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. How do you think they’ll feel if your next round is at a $50 million post money valuation and their hard-earned $25,000 is worth 0.05% of your company? On the phone ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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. Why Can’t a Startup Issue Shares of Common Stock to Investors?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Both Sides of the Table

MAY 13, 2013

If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If If you don’t know venture economics – there is an overview here.). Acquihires and Venture Capital. I’m a VC.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Steve Blank

OCTOBER 24, 2017

Traditionally, in exchange for giving the company money, investors would receive preferred stock, and founders and employees owned common stock. Preferred stock had specific provisions that gave investors control over when to sell the company or take it public, hiring and firing the founder etc.

Founder 245

Founder Technical Review CTO Hire IPO 245

Haystack

JULY 8, 2018

For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders. You can read more about the types of stock granted in startups here. valuation, that’s sort of like a new IPO, but without the lockup period.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. There are as many variations on this scenario as there are startups, but here are some common scenarios upon maturity: The startup negotiates with the bridge lenders to extend the maturity date. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

K9 Ventures

MAY 14, 2011

The funding for the incubator of accelerator may come from the principals running the incubator (as I believe is the case for AngelPad , i/o ventures etc.) The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000).

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Gust

OCTOBER 21, 2011

What these approaches have in common is that they cap the investors’ upside such that even in the most spectacular of liquidity events, unless the notes convert to equity first at a lower valuation, angels don’t get anywhere near the payoff awarded to equity holders. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

abovethecrowd.com

MAY 20, 2013

Private companies typically have capitalization structures that are very complex. There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. 1) Structural Challenges. I call this the “dueling blowfish” problem.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

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. They did get the partners on board on the condition that the term sheet is renegotiated at a lower valuation.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

K9 Ventures

OCTOBER 19, 2015

If you’re even remotely connected to the “industry” of Venture Capital, you need to read Howard Marks’ It’s Not Easy memo. And it isn’t the venture capital firms that are paying these exorbitant prices in private markets it is the hedge funds, corporate funds, and sometimes sovereign wealth funds.

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

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. Leave a Reply Click here to cancel reply.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Scott Edward Walker

JUNE 9, 2011

Introduction This post originally appeared as part of the “ Ask the Attorney ” column I am writing for VentureBeat ; it is another installment of my ongoing series regarding venture capital term sheets. As many of you know, VC investors are typically issued shares of preferred stock, not common stock.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Professor VC

FEBRUARY 18, 2011

He obviously has a founders common stock stake along with cash invested. I asked him how the deal came out for investors since the sale price was significantly lower than the valuation on the round they were raising when we met. The Most Important Venture Capital Statistic. Venture News. ► July. (1).

Acquisition 31

Acquisition San Jose Angel Investor IPO 31

www.paulgraham.com

APRIL 28, 2010

Another concept we need to introduce now is valuation. I say "in theory" because in early stageinvesting, valuations are voodoo. As a company gets more established,its valuation gets closer to an actual market value. As a company gets more established,its valuation gets closer to an actual market value. Better how?

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Gust

OCTOBER 3, 2011

If a company is appropriate for angel financing , for example, it is highly unlikely that it would also be in a position to raise venture capital, and vice versa. Finally, north of, say, $10m – $20m , you’d be getting money from a later stage venture capital fund, whose paperwork will be similar to the earlier VCs.

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Gust

AUGUST 6, 2014

two angel groups investing money in Series Seed Preferred stock purchase. a single venture capital fund putting in the full amount as Series A Convertible Preferred investment. One of those is to draw up a term sheet themselves, setting a valuation, terms and target amount.

Term Sheet 170

Term Sheet Lead Investor Preferred Stock Common Stock 170

Professor VC

MARCH 12, 2015

If I''m going to pay a fee and carry, would prefer to invest in a venture capital fund, as the investments are being managed by professionals and have a duty to look out for LP interests. Authy was a YC company, so Sam''s firm held a 7% common stock equity stake and benefited from the other angels holding the short end of the stick.

Syndicate 28

Syndicate Syndication Silicon Valley Common Stock 28

Pascal's View

MARCH 9, 2010

This is the second in our series of ten frequently asked questions from investors in venture capital partnerships. To address the broader point about accuracy in book valuation, I am concerned that the developing industry standard for venture capital is at risk of going too far while providing no real benefit to investors.

Government 31

Government Private Equity Institutional Investors Venture Capital 31