View from Seed

OCTOBER 24, 2019

The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. No good investor would want the founder/CEO of a company to have insufficient ownership by the series A, and every founder I know is sensitive to taking too much dilution.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

AUGUST 4, 2014

Because these considerations can be quite complex, very emotional and have long-term implications, smart entrepreneurs don’t hesitate to get some legal advice at this early stage, in drawing up an agreement document to be signed by each of the co-founders.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

This is going to be BIG.

JANUARY 18, 2024

On the other hand, they could be the opposite—much more focused on near-term cash distributions than long-term equity appreciation. One of the biggest downsides I’ve experienced when you deal with non-VCs is the addition of non-standard terms to a deal, especially when they use a lawyer who doesn’t typically work on venture deals.

.Net 88

.Net Cap Table Startup Technical Review 88

VC Cafe

JUNE 10, 2022

Until now, early stage startups were relatively unaffected. As a result, founders are accepting increased dilution of the stakes they hold in their own companies. How frozen the venture markets are, roughly, by stage: Crossover: 95% Growth: 85% Series C: 75% Series B: 65% Series A: 50% Seed: 33% — Jason ?BeKind?

Valuation 151

Valuation Marketing Venture Capital 151

ReadWriteStart

JUNE 1, 2020

You must have seen a lot of startups giving out promotions, discounts, and incentives at the early phase of their business. These tactics are primarily to gain market share and a dominant market position. ? Fund your short term operational expenses. The third reason is to fund your short term operational expenses or working capital.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

The Startup Magazine

MARCH 14, 2022

At this stage, the founder mainly raises funding from their sources or family and friends. If you are one of the fortunate early-stage investors to be presented with such an opportunity, it could lead to rewarding returns. 2) Seed funding.

Technical Review 145

Technical Review Due Diligence India Startup 145

Both Sides of the Table

JULY 22, 2010

Back in 1999 when I first raised venture capital I had zero knowledge of what a fair term sheet looked like or how to value my company. Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. Those were the dog days of entrepreneurship.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Startup Professionals Musings

AUGUST 24, 2016

Because these considerations can be quite complex, very emotional, and have long-term implications, smart entrepreneurs don’t hesitate to get some legal advice at this early stage, in drawing up an agreement document to be signed by each of the co-founders. But don’t get greedy.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

David Teten

JANUARY 21, 2021

VI: Revenue-based financing: The next step for private equity and early-stage investment. 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.

Equity 78

Equity Revenue Cofounder Colorado 78

Both Sides of the Table

OCTOBER 12, 2014

These tensions seep out in some angels or seed funds publicly or semi-privately deriding later-stage VCs for their “bad” behavior. I have seen bad behavior from later-stage VCs, believe me. But I have seen equally bad behavior from super early stage investors. As always a balanced perspective is in order.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. The only thing worse than your early-stage company buying another early stage company is you trying to pull off a merger of equals. Want to sell early? We both meant mostly the same thing.

Merger 276

Merger Technical Review Early Stage Dilution 276

YoungUpstarts

JULY 31, 2019

It has become an established term in the software industry to indicate the short term fixes of quick and dirty coding that can create problems down the road — problems that come knocking at the door to collect with interest. The kicker, of course, is that at some point you have to pay that debt down to actually scale. .

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

Both Sides of the Table

SEPTEMBER 25, 2010

I talked about this in my social proof post where I gave some suggestions about how to get the early guys off of the fence. Most early-stage entrepreneurs who have worked with me (either as an angel or as a seed VC) know that I don’t rely at all on the social proof of other investors. When I’m in, I’m in.

Finance 286

Finance Term Sheet Technical Review Warrant 286

The Next Web

OCTOBER 7, 2013

However, at the very early stage, they are taking as much risk with their future as the founders. Layer on the opportunity cost of choosing not to pursue lucrative alternatives offered elsewhere, and it’s easy to see how, if not under the right terms, the engineer #1 position is less than appealing.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Startup Professionals Musings

MARCH 12, 2023

Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. The amounts from angels start as low as $25K, while minimum venture capital amounts usually start in the $2M range.

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Feld Thoughts

FEBRUARY 28, 2023

However, the lack of a conversion right also has implications for anti-dilution protection: in the U.S., In Germany, anti-dilution protection is achieved by issuing additional preferred shares. It is not uncommon for companies wanting to go public to relocate their registered office to the USA at an early stage.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

Startup Professionals Musings

DECEMBER 11, 2022

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

David Teten

JANUARY 19, 2021

John Berger, Director Operations & Impact Solutions, Toniic , observed that this has clear investor benefits: “ The grace period became a feature because it benefits investors in regions like the US where there can be tax differences between short and long term gains. Flexible VC offers you this. Short track record. Emily Campbell, Esq.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

SEPTEMBER 10, 2021

I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. How little we all knew how ironic that term would become but has nonetheless endured. Ten years on much has changed. So in a way it’s self selecting.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

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

APRIL 30, 2015

Especially in the early stages, so much about the company may change in how they think about product or go-to-market — and change multiple times — before raising an institutional round. So it makes it a lot more challenging when you have debt on the books that isn’t as longer term as equity.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Startup Professionals Musings

APRIL 12, 2021

Even if you intend to bootstrap the business, or have an anticipated funding source, it pays to start early in lining up an alternative. When the cash crunch hits, or other alternatives change, it’s too late to start looking, and you won’t have any leverage or credibility to negotiate the terms you want.

Dilution 404

Dilution Incubator Bootstrapping Government 404

View from Seed

SEPTEMBER 9, 2014

For most of my career, I’ve served startups and early-stage companies as an operating executive or advisor. So when founders lose focus, they dilute their power and effectiveness, which diffuses the force of their impact. When should founders hire one? Based on what criteria? Assessing Opportunities & Challenges.

Hiring 336

Hiring Cofounder Startup Technical Cofounder 336

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

JUNE 13, 2020

Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. The amounts from angels start as low as $25K, while minimum venture capital amounts usually start in the $2M range.

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

Both Sides of the Table

OCTOBER 1, 2009

So I believe that now is the perfect time to build a company and the perfect time for early-stage investors to bet on innovation. 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.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Startup Professionals Musings

MARCH 14, 2020

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Both Sides of the Table

NOVEMBER 14, 2017

As an early-stage VC I love this phase. While early-stage companies have all of their engineers working on product innovation, companies that want to scale realize that you also have to build systems to help with organizational scaling. What is a reasonable payback period and how quickly do we want to grow?

Operations 286

Operations New York City Technical Review Startup 286

This is going to be BIG.

NOVEMBER 28, 2021

Over the last two and a half months in the hospital, I’ve actually been fairly productive—no doubt setting the record for VC term sheets offered literally from inside the NICU (three). In fact, it’s why many startup folks leave the early stage world to go over to the big company side—because the benefits tend to be much better.

Hiring 179

Hiring Early Stage Marketing Term Sheet 179

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

The Next Web

SEPTEMBER 13, 2013

But the problem with this is that most VCs in the Valley, especially early stage ones, only like to invest in companies that are within driving distance from their offices. The rest of Asia is still developing with far more angel and early-stage investors than mid-to-later stage folks.

Asia 132

Asia Silicon Valley India Term Sheet 132

Both Sides of the Table

FEBRUARY 25, 2010

We had many term sheets (it was 1999 and we had a pulse) and we were deciding which one to take. We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. We ended up agreeing a term sheet for $16.5 We ended up agreeing a term sheet for $16.5

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Gust

MAY 24, 2012

A typical series of Preferred Stock in a venture-backed startup carries a liquidation preference, anti-dilution rights, dividend preference, a separate vote to fill its own seat(s) on the Board of Directors, “protective provisions” requiring the company to obtain a separate vote of the Preferred to take certain corporate actions, and more.

IPO 159

IPO Equity Common Stock Stock 159

David Teten

AUGUST 19, 2019

According to Brian Parks, “Bigfoot provides RBI, term loans, and lines of credit to SaaS businesses with $500k+ ARR. We’re currently evaluating about 20 companies a month and issuing term sheets to 25% of them; those that fit our investment criteria. Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS.

Revenue 60

Revenue Technical Review Software Review Equity 60

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. Yet today many of the pioneers of “pre-seed funds” are no longer using the term pre-seed to describe themselves on their websites. Where Have The “Pre Seeds” Gone? What gives?

Seed Stage 247

Seed Stage Finance Dilution Early Stage 247

Austin Startup

MAY 8, 2018

Background reading: Founder Compensation: Cash, Equity, Liquidity Fatal Errors in Early Startup Hiring Early Hires: Options or Stock Given how deeply involved we are with early-stage startups hiring their first key employees, I figured it would be helpful to outline a few key principles to help entrepreneurs navigate the topic.

Employee 48

Employee Seed Stage Startup Equity 48

The Startup Lawyer

AUGUST 22, 2011

Here’s a list of the top 5 deal terms that cause harm to startups at the seed financing stage and therefore should be avoided: 5. This is something you might see in a late stage private equity financing with a company that has a history of generating revenue. It does not belong in any early stage deal.

Angel Investor 99

Angel Investor Dividend Dilution Cofounder 99