Both Sides of the Table

APRIL 14, 2012

Did raising money at a $500 million valuation help secure the $1 billion deal? Let me remind readers as I outlined in this post , there are VERY FEW M&A transactions for early-stage startup companies above $100 million. You just said, “nobody would take 1-2% dilution.” Was this a good thing? Hang on, Mark.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

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. You rarely find full ratchets in early-stage deals any more. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. ” Full R at-shits.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Up and Running

APRIL 24, 2018

Secure timely funding. That’s why having a revenue-minded focus from the early stages helps to secure funding. Hiring an in-house legal counsel or consulting with an experienced law firm specializing in healthcare law is probably the best solution.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

Austin Startup

SEPTEMBER 10, 2017

SAFEs and Notes are optimized for speed and simplicity, with a cost of future uncertainty and dilution. Convertible notes/SAFEs are usually executed around times of maximal uncertainty for a company; the very early stages. They have their downsides, which are discussed in some of the above links. No upside for founders.

Valuation 48

Valuation Dilution Silicon Valley Seed Stage 48

Berkonomics

SEPTEMBER 28, 2017

And then there are options: [Email readers, continue here…] Stock options or phantom stock are the tools of early stage businesses used to attract great talent when there is not enough cash to pay market rates. An option plan should carve out an addition of about 15% of the “fully diluted” shares.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

Hippoland

MAY 16, 2018

I put “equity” in quotes because I include convertible notes and convertible securities in this category.) As these start to enter the equity market, there are a lot of investors who will fund these companies at a very early stage – even seed investors who typically don’t do other pre-seed deals will bet here.

Seed Stage 48

Seed Stage Valuation Convertible Security Equity 48

Hippoland

MAY 16, 2018

I put “equity” in quotes because I include convertible notes and convertible securities in this category.) As these start to enter the equity market, there are a lot of investors who will fund these companies at a very early stage – even seed investors who typically don’t do other pre-seed deals will bet here.

Seed Stage 48

Seed Stage Valuation Convertible Security Equity 48

rapidrollout.wordpress.com

JANUARY 15, 2011

By deciding to use a consulting CTO on a temporary basis, you avoid getting stalled in the earliest stages. And finally, you may be able to avoid diluting your equity. Preserve your equity by using a consulting CTO to ramp up your company before securing early-stage financing and hiring a permanent technology partner.

Fractional CTO 40

Fractional CTO CTO CTO Hire Fractional VPE 40

Berkonomics

AUGUST 27, 2015

He has served as advisor to and member of numerous financial exchanges, and was the founder and CEO of Arthur Lipper Corporation and co-founder and Chairman of New York & Foreign Securities Corporation. Today he serves as Chairman of British Far East Holdings Ltd.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Scott Edward Walker

SEPTEMBER 21, 2011

I’ve been helping entrepreneurs raise capital as a securities lawyer for 17+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make. Tip #1: Only Sell Securities to “Friends & Family” as a Last Resort. Many entrepreneurs initially reach-out to friends and family as a source of capital.

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45

Berkonomics

NOVEMBER 23, 2023

and here is the usual early-stage trap… First, a brand-new enterprise is often formed from the efforts of several “partners”, each with an expertise valued by the others. First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. Here are some rules.

Equity 62

Equity Stock Options Vesting Early Stage 62

Up and Running

SEPTEMBER 20, 2021

The authorized shares or the securities are the total number of shares that have been reserved for issuance by the owner of your startup. . The most famous structure to create a cap table is to list investors/security owners on the Y-axis, while the type of securities is listed on the X-axis. Authorized shares. Common shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Berkonomics

MAY 12, 2010

The real insight here is that stock options or phantom stock are the tools of early stage businesses used to attract great talent when there is not enough cash to pay market rates. First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. There are some rules.

Early Stage 85

Early Stage Equity Stock Options Vesting 85

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

The Next Web

JANUARY 24, 2014

According to the Global Entrepreneurship Monitor the Dutch outperform the EU big five in terms of early stage entrepreneurial activity. But our trust is rooted in the security of strong institutions and the rule of law. I believe it is our excessive urge to ‘act normal’ and disdain of ‘networking’ that dilutes our social glue.

Netherlands 143

Netherlands Technical Review Stock Silicon Valley 143

YoungUpstarts

MAY 31, 2016

While it’s fair to say that the aforementioned cornerstones apply to more established companies and are intended to ensure for their continued well-being, early stage entrants can benefit from their guidance as well. Hire smart, ambitious, get-it-done employees and lead them with emotionally intelligent innovation leadership skills.

Technical Review 100

Technical Review Leadership Early Stage Initial Public Offering 100

BeyondVC

JUNE 11, 2007

A typical structure for an early stage deal could be an equity raise of $3-5mm with another $1-2.5mm of debt. If you burn through your cash and can’t make the monthly principal and interest payments, your lender can take over your company as their debt is usually secured against your company and intellectual property.

Intellectual Property 60

Intellectual Property Covenant Warrant Equity 60

Professor VC

JUNE 20, 2011

The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. At this time, we had secured a term sheet from a co-investor from one of my other angel investments (Thanks, Graeme!) So what does this all mean.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

www.paulgraham.com

APRIL 28, 2010

A lawyer I asked about it said: When the company goes public, the SEC will carefully study all prior issuances of stock by the company and demand that it take immediate action to cure any past violations of securities laws. Whatkind of anti-dilution protection do they want? The problems are different in the early stages.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

The Startup Magazine

DECEMBER 14, 2017

But failing to commit the time this part of the project requires in the early stages means you risk coming up with a far better branding concept somewhere down the line and feel compelled to change it, diluting your original brand. A solid security strategy. Draw up a comprehensive security strategy.

Entrepreneur 61

Entrepreneur Cloud Startup Security 61

Reid Hoffman

AUGUST 17, 2021

All of these early-stage companies, you’re taking a risk on a bet; a bet of a future market, a bet on what demand will look like, a bet on how this will evolve. So instead of selling advertising, which is how all search engines have been funded for decades now, you actually provide a subscription to secure a private search.

Cofounder 69

Cofounder Differentiation Search Advertising 69

Reid Hoffman

AUGUST 17, 2021

All of these early-stage companies, you’re taking a risk on a bet; a bet of a future market, a bet on what demand will look like, a bet on how this will evolve. So instead of selling advertising, which is how all search engines have been funded for decades now, you actually provide a subscription to secure a private search.

Cofounder 69

Cofounder Differentiation Search Advertising 69

maplebutter.com

JANUARY 8, 2013

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? Typically its way more important to build product, and pull in early users to give you that feedback vs. speaking about it.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

SVPG

OCTOBER 22, 2015

Part of what causes confusion is a dilution of what is really meant when we call something a “product” or “product-quality” or “productized” or “live in production." You might also recognize this problem in another guise.

Engineer 60

Engineer Dilution Software Early Stage 60

Professor VC

DECEMBER 8, 2015

Musk was the early winner taking the CEO role (for a brief period) in the merged company and the largest equity stake as well. Not surprisingly, the merger was highly dilutive, particularly to Confinity/PayPal shareholders. Both companies offered home security and automation services through partners. At the IPO, Musk held a 14.2%

Merger 28

Merger LP IPO Redemption 28

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

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. Today, un-accredited individual investors are permitted under the Crowdfunding rules to invest in early-stage seed companies, but are prohibited from investing in later-stage, pre-IPO companies.

SEC 36

SEC Accredited Investor IPO Technical Review 36

Up and Running

DECEMBER 9, 2014

What we’re doing is we’re helping small business owners find and discover their options beyond the bank and ultimately help them secure the best rates for their business. Let me list a few [inaudible 00:53:29] is generally the amount of time that is required to actually go and secure a bank loan. My name is John Bates.

Small Business 95

Small Business Finance Forecast Metrics 95