Startup Professionals Musings

AUGUST 6, 2023

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of angel investment groups and venture capital organizations. I would summarize the qualms and feedback from professional investors as the following: Crowdfunding platform costs trickle down to angel groups.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

Startup Professionals Musings

NOVEMBER 25, 2020

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. I would summarize the qualms and feedback from professional investors as the following: Crowdfunding platform costs trickle down to angel groups.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

Feld Thoughts

FEBRUARY 9, 2016

One of my favorite lines in buried in the middle: “I’ve heard enough companies say “we simply can’t cut costs or it will hurt the long-term potential of the business” to get a wry smile. Pragmatic cost cuts are always possible and often productive.” Then, if you end up doing a down round, it suddenly matters a lot.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

SEPTEMBER 28, 2014

So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000. Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service. Startup Lessons'

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

David Teten

AUGUST 7, 2019

The reverse also holds: a Value investment can become Momentum, and then follow with a down round. Today, some Momentum-centric venture capital investors have high paper returns. The Momentum model depends in part on more and more venture capital being readily available.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

VC Cafe

NOVEMBER 30, 2022

Companies have raised record amounts of venture capital money in 2020 and 2021. Much of that capital is still sitting on companies balance sheets, but the pace of venture capital deployment was down 50% in Q3 2022 in the US and 44% down in Europe. Growth at all costs is no longer an option.

Europe 97

Europe Balance Sheet Valuation 97

ReadWriteStart

JUNE 1, 2020

It is going to cost a lot of money just to get the initial batch of products to test the market and would definitely require external funding. Under this category, you have the angel investors who would invest their own money and Venture Capital or VC firms, who manage funds aimed towards specific startup sectors and stages.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 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.) What’s the customer acquisition cost? Who recommends a sale? Who is the decision maker? Who is the economic buyer?

Lean 244

Lean Silicon Valley Startup RSS 244

Both Sides of the Table

JUNE 22, 2011

New investors hate down rounds. When your competition does irrational things to grow fueled by low-cost capital it makes it harder for you to compete by playing by the conventional rules. It’s what I love about entrepreneurship and about venture capital. Many good companies will not get funded.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Berkonomics

AUGUST 3, 2023

When the need is high… For the rest of us, desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Professional angels: This is the arena where I work and play.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

abovethecrowd.com

APRIL 20, 2016

In Silicon Valley boardrooms, where “growth at all costs” had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue. Their own ego is also a factor – will a down round signal weakness?

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Both Sides of the Table

OCTOBER 18, 2015

There is a lot of uncertainty about the state of the private, high-growth technology markets and the venture capital markets that underpin them. Technology riches yield bumper crops in venture capital with new firms and new largesses – the rewards of LPs rediscovering our asset class. 25% “down rounds?

IPO 150

IPO Venture Capital LP SEC 150

Startup Professionals Musings

MAY 20, 2016

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. These groups are now largely run by volunteers at no cost to entrepreneurs. Later funding rounds can’t deal with a thousand shareholders.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Both Sides of the Table

FEBRUARY 4, 2016

” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. Most flat rounds. More down rounds. More structured rounds. Relatively harder to raise capital.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Berkonomics

MARCH 28, 2019

Sooner or later you may need to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. This is only a minor problem in that both forms can convert easily into ‘C’ corporations at low cost and little consequence. What VC’s can and cannot do.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Berkonomics

JUNE 8, 2017

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. It’s an option, even though an expensive one. months from introduction to investment.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Both Sides of the Table

FEBRUARY 14, 2016

Put simply, it’s really hard to build a strong company when all of your competitors are giving away free s**t fueled by venture capital chasing winner-take-all returns. Why Down Rounds are Harder Than You May Think. Down rounds are hard. Plus, down rounds trigger anti-dilution provisions.

Valuation 150

Valuation Down Round Startup Later Stage 150

Growthink Blog

MAY 23, 2011

With this seed capital – more often than not totaling between $100,000 and $1,000,000 - the company accomplishes a number of key technical milestones, gets a beta customer or two, and then goes on a "road show" to venture capitalists around the country for capital to “scale” the business. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

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

Berkonomics

APRIL 6, 2012

Sooner or later these businesses will have to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. This is only a minor problem in that both forms can convert easily into ‘C’ corporations at low cost and little consequence.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? We raised a seed round. You’ll find out the minimum when the next round is raised. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? On the phone …. About $1 million. Me: At what price?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Scalable Startup

FEBRUARY 1, 2013

A big part of why venture capital actually is important and enduring is because the public market is flighty and late-stage investors are flighty, and customers for that matter are flighty, and so you can’t — if you are running one of these companies you can’t — you just can’t rely on people being balanced.

Software Review 22

Software Review Startup Venture Capital Stock 22

Both Sides of the Table

SEPTEMBER 27, 2010

There are real changes in the venture capital industry and it would have been fun to talk about them. My wife worked at Google so while we had good income in Silicon Valley it’s hardly the life of luxury given the costs of housing. Answer: Not much. And that was evident on today’s Angel vs. VC panel.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Berkonomics

JANUARY 20, 2010

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

www.paulgraham.com

APRIL 28, 2010

Venture Capital Funds VC firms are like seed firms in that theyre actual companies, butthey invest other peoples money, and much larger amounts of it.VC It costs you a little more equity, but being able to play the two firms off each other (as well as ask one if the other is being out of line) is invaluable.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Altgate

MARCH 8, 2009

Their portfolio firms will be able to cut back on headcount and other spending and additional capital from investors will allow the companies to survive for the 2-5 years it will take the market to begin to recover. Later stage funds will end up owning more of their portfolio companies via down rounds and ultimately should see ok returns.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34