Both Sides of the Table

JULY 23, 2014

The rise of “micro VCs” or seed-stage funds. Just 3 years ago there was talk of institutional investors “not being able to write small enough checks.” ” The new narrative is “will my seed funds be able to fund the prorata of their winners?”

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

ithacaVC

DECEMBER 22, 2012

I recently engaged in a conversation (over a few days) about the need for a seed stage company to have a board member other than the founder. One final thought – what about the VC’s fiduciary duties to its own investors (called limited partners). Might be kind of lonely, but completely legal. Fair point.

Seed Stage 82

Seed Stage Preferred Stock Founder Angel Investor 82

K9 Ventures

MARCH 23, 2011

There has been a lot of noise in the Valley lately about how most seed stage deals are now being done as convertible notes. The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion. What percent of the company should the note holder get on conversion?

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

ithacaVC

APRIL 5, 2011

One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family). A real institutional investor wants to invest $XX,000 in his company. I hope the investor agrees.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Austin Startup

MAY 17, 2017

It also can just be logistically cumbersome for a seed stage company to keep track of who gets to attend meetings, who has to be notified of what, etc. Giving seed stage investors Board seats is not the norm. Do not dish out Board observer rights lightly. Take it seriously.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48