View from Seed

OCTOBER 28, 2019

Over the past few years, “pre-seed” as a distinct category has emerged within the early stage fundraising landscape. But this financing contour description is just a proxy for underlying business metrics. It really does depend from startup to startup.

Seed Stage 247

Seed Stage Finance Dilution Early Stage 247

Austin Startup

JULY 6, 2018

Ask the Users Startup Accelerators: Bundled and Unbundled Over the past several years, accelerators have emerged as a powerful filtering and signaling mechanism in early-stage startup ecosystems, allowing high-potential young startups to connect with investors, advisors, and other strategic partners far faster and more efficiently than before.

Dilution 48

Dilution Startup Technical Review Equity 48

View from Seed

JULY 15, 2020

Some early stage businesses may even be able to get to CFBE fairly quickly. Mid-stage portfolios can be more acutely impacted if many companies have fat cost structures and were investing heavily in growth that is not materializing. Other companies are great businesses, but are effectively encountering a dilution event.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Both Sides of the Table

JUNE 5, 2011

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. That’s the deal you get when you’re raising in a good market for startup financing. That’s fine.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

OCTOBER 7, 2014

There weren’t a lot of seed funds in 2007 so this was often done by angels, funding consortia or sometimes early-stage funds that existed then (First Round Capital, True Ventures, SoftTech VC, etc.). 5 million was always the classic definition of an A-round between the late nineties (crazy financings aside) and say 2007.

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Startup Professionals Musings

SEPTEMBER 5, 2016

Many aspiring entrepreneurs jump ship from corporate environments, complaining that they want to be their own boss, only to find that investors are more demanding bosses than the ones they left. Investors expect nothing less than a full-time commitment, even in the early stages when the business model has not yet been proven.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Gust

OCTOBER 21, 2011

To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. Suppose the notes converted as if the acquisition were an eligible financing round.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Both Sides of the Table

SEPTEMBER 25, 2011

All it says is that the VC has the right (but not obligation) to invest his/her proportional ownership in the next round of financing. So if you’re raising $10 million and only want to face 20% dilution and that’s the threshold for a new investor, you’re going to see tension. Why would this happen? You allowed it.

Entrepreneur 310

Entrepreneur Dilution Finance Silicon Valley 310

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. This situation is not always in the best interest of founders.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. This situation is not always in the best interest of founders.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? In a standard VC term sheet there is a standard term called an “anti dilution provision” and they are in nearly 100% of deals. You rarely find full ratchets in early-stage deals any more. Some thoughts on raising angel money.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

OCTOBER 8, 2014

Cautionary note: No competent VC is actually fooled when you show up after raising $6M in seed financing and say you’re now raising an A! There weren’t a lot of seed funds in 2007 so this was often done by angels, funding consortia or sometimes early-stage funds that existed then (First Round Capital, True Ventures, SoftTech VC, etc.).

Cap Table 136

Cap Table Silicon Valley Term Sheet Non-Compete 136

David Teten

JANUARY 21, 2021

VI: Revenue-based financing: The next step for private equity and early-stage investment. This is a summary of: Revenue-Based financing: State of the Industry 2020. 4 from our first year cohort of 10 crossed $1m ARR with less than 15% equity dilution while growing 2x; all are operationally profitable.

Equity 78

Equity Revenue Cofounder Colorado 78

Up and Running

APRIL 24, 2018

You and your team must know how to think about problems from new angles and adapt to changing market and customer demands. Because of complex government regulations and a lengthy incubation period, funding a healthcare startup is more difficult compared to financing a tech startup.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

rapidrollout.wordpress.com

JANUARY 15, 2011

He or she might call himself a “consulting CTO,&# “freelance CTO,&# “on-demand CTO,&# “CTO on call,&# “CTO for hire,&# or just a “technology strategy advisor.&# By deciding to use a consulting CTO on a temporary basis, you avoid getting stalled in the earliest stages.

Fractional CTO 40

Fractional CTO CTO CTO Hire Fractional VPE 40

Pascal's View

OCTOBER 9, 2013

This video focuses on four of those fundamental risks: ( 1) A startup’s high probability of failure; (2) The mathematics of dilution; (3) The tendency to misunderstand a company’s stage of development and, therefore, its capital needs; (4) Understanding the risks associated with investing good money after bad and knowing when to call it quits.

Angel Investor 28

Angel Investor Video Dilution Venture Capital 28

Startup Company Lawyer

JANUARY 11, 2010

I seem to be doing a lot of pre-Series A convertible bridge note financings these days. 50%) or warrant coverage are typically more company-favorable than a Series A financing where a valuation is set. Similarly, if the company was sold for $100M before another round of financing, the investor would receive 10%, or $10M.

Angel Investor 39

Angel Investor Valuation Bridge Financing Preferred Stock 39

Both Sides of the Table

FEBRUARY 22, 2011

Here’s the problem: Let’s say you have 5 VCs (plus angels but let’s ignore that for now) and each one owns 5% so you took 25% dilution to get the round done. This is largely true because most VCs have a 20% minimum threshold in order to invest so bringing in multiple VCs can be very expensive in terms of dilution.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. By the first quarter of 2016, the late-stage financing market had changed materially. Investors were becoming nervous and were no longer willing to underwrite new Unicorn-level financings at the drop of a hat. This is uncharted territory.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

maplebutter.com

JANUARY 8, 2013

If you believe in it – then finance whatever you can yourself. When it comes to early stage investing – it’s all gut. Does it make sense to spend this time speaking about your early stage start-up when your product has not even entered Alpha testing? Co-founders are the highest form of dilution to a business.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

www.quora.com

SEPTEMBER 22, 2011

1 vote by Elad Gil It's a risk/reward, supply/demand power equilibrium. Unless you are a VC with preferred shares and anti-dilution protection and board control your equity in the company is worthless. How much equity do early employees typically get? How much equity do early employees typically get? This answer.

Equity 40

Equity Employee Founder Cofounder 40

Ben's Blog

MAY 24, 2021

Second, by better matching supply and demand, direct listings have generally mitigated the magnitude of IPO Pops, thus engendering better overall price discovery. Thus, while the results are still early, we do seem to see better price discovery and reduced after-market volatility from the direct listing process. 1990-1998 13.3%

SEC 36

SEC Accredited Investor IPO Technical Review 36