David Teten

JANUARY 19, 2021

Seed-stage compatible: Like traditional equity VC investors, Flexible VCs accomodate early-stage investment risk within their portfolios better than a traditional RBI funder. Typically stable, high margins; repeatable sales model; clear path to profitability; and high growth potential. Short track record.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

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

ReadWriteStart

SEPTEMBER 10, 2010

I call it drip-financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn't always come along, though). In 1M/1M, our preferred financing strategy is customers. You can get cash without diluting your ownership in the company.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Seeing Both Sides

AUGUST 28, 2017

Early stage entrepreneurs will also still likely value experienced advice on company-building from seasoned venture capitalists. In these early times, some startups may be hesitant to pursue this path because of the uncertainty and perceived risk. But many are. Shift of value from equity holders to token holders.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Seeing Both Sides

AUGUST 28, 2017

Early stage entrepreneurs will also still likely value experienced advice on company-building from seasoned venture capitalists. In these early times, some startups may be hesitant to pursue this path because of the uncertainty and perceived risk. But many are. Shift of value from equity holders to token holders.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Haystack

JULY 8, 2018

So, that’s why I’m writing this short post specifically for 1) employees of early-stage startups and 2) the earliest investors in these startups, who are often themselves new to the entire sector. And as a disclaimer, 1) I am figuring this out myself in real-time.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. It is very likely that one or more co-founders will be putting in some cash in the early stages of the company. What are the financing plans for the company? Is it debt?

Cofounder 128

Cofounder Founder Equity Dilution 128

The Equity Kicker

MAY 14, 2012

Twice in the last week I found myself coaching founders on how to build a financing plan around value creation milestones so I thought I would share what I said here. demonstrating a repeatable sales model (typically telephone sales, direct sales, or channel sales). achieving first international sales.

Finance 118

Finance Valuation Venture Capital Dilution 118

Startup Professionals Musings

SEPTEMBER 5, 2016

Investors expect nothing less than a full-time commitment, even in the early stages when the business model has not yet been proven. Keep later critical financing needs viable. Don’t let early funding increase risk and dilute your potential. For aspiring entrepreneurs, a fallback plan is always good.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Hunter Walker

JANUARY 15, 2016

By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue. From the middle to 2005 to early 2010 the business was break-even or better every quarter. Now it’s time for the Finance, Portfolio and Expansion teams to take over.

Technical Review 48

Technical Review Startup Cofounder SMS 48

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? These are your candidates, because they are companies already absorbing much or all the marketing expense necessary to make sales of your invention. So, there you have it.

IP 54

IP Intellectual Property Investment Bankers Product 54

Both Sides of the Table

DECEMBER 1, 2009

I know this is unconventional thinking but if you want to understand more I cover my rationale on this post about The Most Common Early Stage Startup Mistakes and again in this post covering how to implement startup prenuptials. Do you understand how to lead a sales process? Are you a shaper vs. a completer-finisher? -

Hiring 289

Hiring Cofounder Dilution Startup 289

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? These are your candidates, because they are companies already absorbing much or all the marketing expense necessary to make sales of your invention. So, there you have it.

IP 48

IP Intellectual Property Investment Bankers Product 48

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. . Let’s start at the end.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. You just said, “nobody would take 1-2% dilution.” I am not saying all companies should be for sale. Hang on, Mark.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

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

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. Flippers financed by venture capitalists are more likely to hire executives having high level profiles and previous exit experience.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Up and Running

APRIL 24, 2018

Of course, you will need a killer product—but, you will also need a competent growth strategy that will encompass comprehensive marketing, sales, research and development, technology, and beyond. That’s why having a revenue-minded focus from the early stages helps to secure funding.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

The Next Web

OCTOBER 7, 2013

However, at the very early stage, they are taking as much risk with their future as the founders. Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. So, if o = initial ownership and y = total dilution, x = o * (1 – y).

Engineer 129

Engineer Dilution Option Pool Vesting 129

www.seriesseed.com

MARCH 2, 2010

SeriesSeed.com Series Seed Financing Documents Blog Home Documents Blog Archives Subscribe 09/02/2010 Version 2.0   That said, I think this quote accurately captures the life-cycle of creating a simple set of documents for early stage investment. price based anti-dilution). Then they laugh at you. Then you win.”

Finance 58

Finance Term Sheet Equity Aggregator 58

Business Plan Blog

OCTOBER 4, 2013

This is true for early stage funding as well as venture capital funding. If you have a technical background and you are focused on product development, consider a co-founder with a sales and marketing background that can focus on selling your world class product. Early Stage. Seed to Series A.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

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

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. The total preference is less of an issue in early stage companies (e.g. However, it can be a significant issue in later stage companies that have raised a lot of money. Companies raise money by selling new stock after the board of directors authorizes the sale to investors. diluted) terms.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Company Lawyer

JANUARY 9, 2011

Convertible debt with a price cap seems to be the preferred structure for early-stage financings. Over the last 12 months, I’ve noticed a trend where early-stage startup companies raise seed financings of between $250K and $1M using a convertible note with a price cap.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

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

Do that – nothing else but one product / company / focus and get to $1M in sales with atleast $15% net profit. If you believe in it – then finance whatever you can yourself. I also like to get a sale $$$ ASAP. When it comes to early stage investing – it’s all gut. Once you’ve done that – then. do something else.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

The Next Web

DECEMBER 3, 2013

If that’s the Chief Technology Officer, or the sales chief, or the marketing person, whoever is the best public speaker, you should always put your best foot forward.”. The way your startup was founded and financed until now will affect your eligibility for a startup accelerator. Try, try, try again.

Startup 153

Startup Cofounder Valuation Dilution 153

Up and Running

JULY 14, 2015

I’d implemented a business plan including marketing, engagement, sales strategy and realized a few months in that it wasn’t servicing a key influence or in the sales process. The cool thing is with the device like, that with the science like that, there’s a lot of early stage proving ground needed.

Incubator 60

Incubator Email Startup Oregon 60

Reid Hoffman

NOVEMBER 14, 2018

Raising excessive amounts of capital dilutes their stake in the company, and introduces a preference overhang (all that money has to be paid back before the founders and employees get to participate in the upside). Raise more money than you need. Entrepreneurs try to avoid raising more capital than they need. This is hogwash.

Engineer 28

Engineer Burn Rate Hiring Dilution 28

Up and Running

DECEMBER 9, 2014

Bates: Good morning and welcome to our CEO panel, “How to Fine-Tune Your Small Business Finances From Funding to Growth” which I think is the direction that we would all like to be going. I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth.

Small Business 95

Small Business Finance Forecast Metrics 95

Ben's Blog

MAY 24, 2021

Among the findings are: SPAC dilution amounts to roughly 50% of the cash ultimately delivered to the companies brought public. The SEC’s Director of the Division of Corporate Finance recently provided some guidance raising questions about the extent of PSLRA coverage. Enhance access to private, secondary market transactions.

SEC 36

SEC Accredited Investor IPO Technical Review 36

Seeing Both Sides

JANUARY 13, 2015

Some VCs prefer investing at the earliest stages and then cycle off the board of directors. Others prefer to come in at the later stages, post product-market fit, and not have to deal with the risk and roller coaster of the early stages. Financing: holy crap - we are running out of money in 6 months!

Mezzanine 20

Mezzanine IPO Finance Business Model 20