Startup Professionals Musings

SEPTEMBER 26, 2015

What they worry about is a whole different set of issues, including how much control they will have over how their money is spent, what will happen when future investors jump in to dilute their position and how they will get some money back if things don’t go according to plan. Terms to prevent equity dilution relative to others.

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Term Sheet Demand Preferred Stock Liquidation Preference 120

Startup Professionals Musings

NOVEMBER 7, 2022

Don’t let early success dilute your focus, or demand that the new venture quickly meet your mainline financial and growth metrics. Feedback from pilots and early experiments must be integrated to maintain momentum.

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Advisory Board Incubator Dilution Agile 359

This is going to be BIG.

MAY 17, 2012

2) Supply and demand of capital willing to invest in your company. Getting less dilution than standard means that you have to have made fantastic progress, have a world class team, etc. The other way to move that number is much more simple-- generate more demand for the round than there is supply of allocation.

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Venture Capital Framework Dilution Equity 116

Startup Professionals Musings

NOVEMBER 8, 2010

Providing the major funding source for an early-stage startup is a totally different dimension, but it usually trumps all the items above in demanding some equity. For purposes of commitment and business decision making, I always recommend that execution partners retain control of at least 50% of the equity.

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Equity Intellectual Property Cofounder CTO Hire 228

Both Sides of the Table

JULY 22, 2010

So taking the same fund raising round and assuming that the VC wants the options including before he or she funds (and before is totally standard) then the math works like this: Assuming a 15% option pool post funding then you need a 20% option pool pre funding (because the pool gets diluted by 25% also when the VC invests their money).

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Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Startup Professionals Musings

JANUARY 31, 2020

In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Good entrepreneurs are often diluted in their potential by trying to attack too many new market opportunities or customer requests concurrently. Certainly interfacing to the outside world may not be an inventor forte.

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Founder Intellectual Property Dilution Startup 312

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Growth can dilute a business’s culture and customer value proposition and put the business in a different competitive space.

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Dilution Virginia Management Washington 209

View from Seed

JULY 15, 2020

These companies are probably burning a lot of cash, seeing headwinds in demand, and have funding needs that are substantial. These companies are ones where demand has fallen by 80% or more, causing their underlying viability to be in question. Other companies are great businesses, but are effectively encountering a dilution event.

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Portfolio IRR Dilution Distribution 215

Startup Professionals Musings

MARCH 12, 2023

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

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Angel Investor IRR Venture Capital Valuation 246

YoungUpstarts

SEPTEMBER 23, 2017

Also, determine the market demand to make sure what you’re doing is sustainable. Nonetheless, many entrepreneurs don’t do this because accepting ownership dilution when it isn’t necessary, is too painful. If you tend to over-fund your start-up, you’ll perhaps suffer some unnecessary ownership dilution as a consequence.

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Cofounder Sweat Equity Equity Dilution 124

Both Sides of the Table

SEPTEMBER 5, 2012

In a standard VC term sheet there is a standard term called an “anti dilution provision” and they are in nearly 100% of deals. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. But my $500k, while only buying 10% of the company (and now diluted down to 7.5%

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Ratchet Liquidation Preference Equity Stock 354

Startup Professionals Musings

MAY 8, 2022

Don’t wait for the harsh reality of the demanding business world to start thinking about these tradeoffs. The downside is loss of control and financial dilution. That’s not an attractive statistic if you crave control and power. Should you start a company solo or find co-founders to help you? The co-founder relationship dilemma.

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Founder Hockey Stick Cofounder Liquidity Event 325

The Startup Magazine

FEBRUARY 2, 2021

Many academic labs are less interested in market trends and largely ignore competitive landscape and market demands. This unique business model is proven to secure strategic and non-dilutive capital as part of a business model. As a result, research funding is not met with a reasonable return on investment.

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Technical Review Syria Developer United States 118

Genuine VC

JULY 19, 2010

I think that the number of players in this devloping class of what I’d call “Micro VCs” will continue to increase over the coming years: the model fits into an opportunity on the capital supply side, as well as more importantly becomes the right product for many entrepreneurs on the demand side. Structural.

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Seed Stage Technical Review Dilution Offshore 175

ReadWriteStart

JANUARY 13, 2024

In a progressively saturated market, these startups need to reevaluate their strategies and wisely distribute resources to remain competitive and sustainable amidst the demands of investors and well-established competitors.

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Down Round Marketing Artificial Inteligence Startup 154

Austin Startup

JULY 6, 2018

Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Anti-Dilution. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print.

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Dilution Startup Technical Review Equity 48

David Teten

JANUARY 21, 2021

Jonathan Bragdon , CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50-$300k in post-startup, post-revenue businesses planning to 2X revenues in 12-24 months. Capacity Capital , based in Chattanooga, Tennessee, was launched in 2020 with a primary focus on the Southeast.

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Equity Revenue Cofounder Colorado 78

The Startup Magazine

JANUARY 12, 2024

The Brand Identity Balancing Act While chasing growth, there’s a risk of diluting what made your brand special in the first place. Misreading market demand or cultural nuances can lead to costly missteps. Failure to do so can lead to operational inefficiencies, like a dam struggling to hold back a flood of issues.

Intellectual Property 118

Intellectual Property Dilution Security Government 118

YoungUpstarts

OCTOBER 16, 2016

As your business thrives, the providers who support you with banking, marketing and other services should change as your demands change. Growth places new demands on business, and with this comes an opportunity to reevaluate core functions and operations. Re-set the vendor and partner paradigm.

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Cofounder Balance Sheet Small Business Administration Technical Review 100

Both Sides of the Table

OCTOBER 1, 2009

It is also a result of pent-up demand. My advice : if you’re raising a $750,000 round and you have demand for $1.2 If you’re raising $2 million and can close on $3 million – don’t optimize to minimize short-term dilution, optimize for contingencies in case the market gets worse. million – take it.

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Technical Review Stock Hawaii Early Stage 269

The Startup Magazine

AUGUST 9, 2022

One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted. TSM: How do you handle the challenge of balancing the demands of entrepreneurship with personal life responsibilities and parenthood? I would also put culture in the top 3.

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Cofounder Founder Miami Marketing 148

Both Sides of the Table

OCTOBER 12, 2014

All the confusion you hear from friends or read in the press is related to this nuance that early investors demand prorata rights and sometimes fight like hell to maintain them (Facebook problem) and sometimes prefer not to take them (overvalued company that they perceive isn’t doing as well as new investors coming in think).

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Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

MARCH 11, 2011

Too many entrepreneurs focus on dilution. But over-optimizing for dilution is a bad attribute relative to focusing on creating a big & winning company. They would launch quickly and test whether or not there is any demand. Bill thinks that most companies your success is usually binary.

Product 350

Product Tuvalu Dilution Incubator 350

Both Sides of the Table

FEBRUARY 20, 2019

For starters, the incoming CEO will demand between 4–6% of the company so shareholders will immediately face dilution. That’s the implicit trade you’re making as a founder when you assume tens of millions of dollars in other people’s money to grow your business more rapidly and assume less personal financial risks.

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Venture Capital Startup Angel Investor Silicon Valley 236

Hunter Walker

AUGUST 8, 2021

It has nothing to do with the size or terms of the actual raise, just the presence of greater supply than demand. And every Homebrew fund has had excess demand as well. We set out to raise $8 million and there was so much demand we raised $10 million” = oversubscribed.

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Dilution Demand Startup Founder 155

Startup Professionals Musings

NOVEMBER 6, 2020

Once you accept equity investor money, or go public with stockholders, you won’t believe the things they demand, and the legal rules you have follow. With major investors, your equity and return is diluted and delayed. You want to be your own boss, and do things your way. Take pride in your leadership role in the local environment.

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Small Business Small Business Administration SBA Equity 311

Startup Professionals Musings

JUNE 13, 2020

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

View from Seed

OCTOBER 28, 2019

In other words, the goal of a pre-seed round isn’t to subsequently raise a Series A (which these days requires both product-market fit and meaningful evidence of strong market demand), but to raise another round of seed financing. It really does depend from startup to startup.

Seed Stage 247

Seed Stage Finance Dilution Early Stage 247

YoungUpstarts

MAY 9, 2017

Lean organizations are lightweight and nimble enough to pivot based on shifting demands. individuals dilute their focus and slow their productivity. Also related to business agility is the ability to synchronize efforts in the midst of changing priorities. 4 Better Project Visibility at the Team Level.

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Lean Agile Technical Review Dilution 124

YoungUpstarts

MAY 6, 2019

If there is a gap in the market, there will be demand. If you are getting funded for the first time, which means that you have not diluted the shares of your company, you will be receiving Series A funding. It will be in millions and you will have to dilute your shares even further if you are aiming for another funding round.

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Startup Technical Cofounder Merger Early Stage 113

ConversionXL

NOVEMBER 15, 2022

It might make sense to move more live chat staff over to the phones to handle demand. This example from a presentation by Brent Dykes shows how unnecessary noise dilutes data and how much more effective its when stripped back: Image Filename: example-from-a-presentation-by-brent-dykes.jpg. Focus on the data that matters.

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Marketing Analytics Audience Design 100

YoungUpstarts

OCTOBER 14, 2019

And when there’s so much demand for some mind-twisting, enjoyable experience, success in such business is inevitable. Sure, in today’s market, the escape room business won’t generate “800% revenue for locking your customers”, but it doesn’t dilute the fact that it’s still an extremely profitable business. . Meaning, there’s demand.

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Dilution Demand Revenue Cost 113

Feld Thoughts

MARCH 24, 2017

They’re a rare venture fund that doesn’t exercise pro-rata rights over the lifetime of an investment, meaning they dilute alongside company founders, which they believe better aligns their interests as seed investors with the entrepreneurs. But they didn’t take advantage of that demand. The only problem was they didn’t have any room.

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Founder LP Technical Review Seed Stage 75

Startup Professionals Musings

AUGUST 10, 2019

Don’t wait for the harsh reality of the demanding business world to start thinking about these tradeoffs. The downside is loss of control and financial dilution. That’s not an attractive statistic if you crave control and power. Should you start a company solo or find co-founders to help you? The co-founder relationship dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Startup Professionals Musings

JUNE 2, 2019

Many busy new venture owners believe they have heard it all before, so they tune out of conversations, or revert to multi-tasking, thus diluting their leadership. Many new venture owners have trouble disengaging from the escalating demands of their business to celebrate the small successes of the people and customers who depend on them.

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Leadership Dilution Metrics Demand 244

Both Sides of the Table

JUNE 17, 2017

They hired a biz dev team to work on deals where their product could be embedded in other people’s products as a way to increase customer demand. If there was strong market demand for their product then this investment might pay off handsomely. Stock option grants dilute your ownership in the company.

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Stock Options Startup Dilution Venture Capital 227

Startup Professionals Musings

JULY 26, 2019

People need coaching to weather setbacks and surprises which can dilute their confidence, and take away their ability to experience their full potential. In fact, in today’s digital age, with a rapid movement to new generations of workers, and equally rapid changes in technology and market demands, your business may not survive without it.

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Dilution Agile Developer Demand 229