Startup Professionals Musings

AUGUST 6, 2023

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of angel investment groups and venture capital organizations. That’s not as high as the failure rate with professional investors, but it should convince entrepreneurs that crowdfunding is still no panacea for funding.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

Startup Professionals Musings

NOVEMBER 25, 2020

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. These groups are now largely run by volunteers at no cost to entrepreneurs. Lack of checks and balances on startup valuations.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

ReadWriteStart

JANUARY 13, 2024

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Feld Thoughts

FEBRUARY 9, 2016

And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. We entrepreneurs have been spinning that line for decades in every boom cycle. But, as you raise more money at higher valuations, this will normalize. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

JUNE 22, 2011

This was an audience of mostly first-time entrepreneurs. It is great for entrepreneurs and great for VCs. So here is what I have been telling entrepreneurs privately for the past 6 months. They have seen one side of a market where many of us have seen the ebb and flow multiple times. I believe that. Why does all this matter?

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Berkonomics

MARCH 5, 2020

In the creation of a young company, there are five principal risks to be addressed by the entrepreneur. So, it is important for the entrepreneur to identify, address and mitigate each of these in order to increase valuation and decrease the risk of ultimate loss of the business. And fifth: Competitive risk. .

Valuation 62

Valuation Down Round Early Stage Demand 62

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. The real issue here is that if an entrepreneur comes in to a pitch and goes on and on about how they’re going to build a billion dollar company in just a few years, most investors eyes tend to glaze over.

Finance 205

Finance Silicon Valley Valuation Startup 205

Berkonomics

AUGUST 3, 2023

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor).

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Lightspeed Venture Partners

OCTOBER 7, 2012

This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Berkonomics

MARCH 15, 2012

In the creation of a new enterprise, there are five principal risks to be addressed by the entrepreneur. So it is important for the entrepreneur to identify, address and mitigate each of these in order to increase valuation and decrease the risk of ultimate loss of the business. And fifth: Competitive risk.

Valuation 80

Valuation Down Round Demand Management 80

Startup Professionals Musings

MAY 20, 2016

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. These groups are now largely run by volunteers at no cost to entrepreneurs. Lack of checks and balances on startup valuations.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Startup Professionals Musings

JANUARY 27, 2012

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Berkonomics

OCTOBER 18, 2018

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO. The chasm between management and employees. Investor loyalty is most tenuous of all.

Valuation 96

Valuation Dilution Down Round Employee 96

Both Sides of the Table

FEBRUARY 4, 2016

They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system. Median pre-money valuations skyrocketed – shooting up 3x in just three years as investors competed to christen imaginary animals with imaginary valuations. So what happened?

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board. Marty Zwilling.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

www.mattbartus.com

DECEMBER 9, 2012

How to pump up your VC valuation. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed. You have a 20% option pool, so you know this will take your ownership down from 80% to 60%, and the VC will get 25%. — 23 Comments.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Berkonomics

JUNE 8, 2017

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor). Dave’s book and ebook on raising money available on Amazon.com.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Feld Thoughts

APRIL 21, 2016

Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?

Marketing 70

Marketing Down Round Startup IRR 70

Berkonomics

MARCH 14, 2019

Of course, we are speaking of increased valuation of your company when we speak of “wealth.” Especially if you are in the early stage of growing a business, these five risks can and often do derail entrepreneurs before realizing the riches of a great exit. So, let’s examine them and mitigate them. Make you wealthy someday.

Valuation 48

Valuation Down Round Early Stage Demand 48

The Equity Kicker

JANUARY 22, 2014

In my experience this is one of the hardest points for many entrepreneurs to grasp. Investors pay a high valuation to get into a good deal, betting on continued fast growth. You fall into the spiral of death: head of sales gets replaced (at least once), CEO gets replaced (at least once), a down-round financing happens (if lucky).

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

David Teten

AUGUST 7, 2019

Likely signs of a Momentum investment: the round is oversubscribed and the entrepreneur has more negotiating leverage than VCs during the closing process. . than comparable companies in the same sector that raised at a higher valuation. THEREFORE: we don’t need to be valuation-sensitive. LTV / CAC, revenue growth, etc.)

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Both Sides of the Table

FEBRUARY 8, 2016

The startup industry may be “resetting,” which doesn’t mean a “crash” but rather just a resetting of valuations, timescales, winners/losers, capital sources and the relative emphasis of growth rates vs. burn rates. We entrepreneurs have been spinning that line for decades in every boom cycle. Start early.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

Hippoland

NOVEMBER 13, 2016

When I was an entrepreneur, it never crossed my mind how VCs measure their success. So, as an entrepreneur, in many cases, you are pitching people who may not even be good investors. If a company raises a good round, it gets marked up to the new value. Shouldn’t they get a bump up in valuation?

IRR 48

IRR Valuation Portfolio Due Diligence 48

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. ValuatIon should be a function of value, not ego. Kawasaki’s Law of Pre-Money Valuation: for every full-time engineer, add $500,000; for every full-time M.B.A., Our goals, their goals.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

View from Seed

FEBRUARY 19, 2015

It’s nice to get great valuations and hire A-players. Sometimes the only path forward is to fill a gap with a down round of funding, a B-player, or some other non-ideal option. Special thanks to Rob May for sharing his advice to other startup CEOs and entrepreneurs. Keep at it. Be pragmatic. But sometimes you can’t.

Founder 120

Founder Startup Cofounder Business Model 120

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A Given that the Series Seed is issued at a fairly low valuation, anti-dilution protection is probably not that important, as a “down round&# from a low valuation in the Series Seed is unlikely.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

thebarefootvc

AUGUST 26, 2015

After the market downturn on Monday I set several limit orders – primarily on tech holdings that I wanted to increase positions in – in my personal account and went back to meeting with entrepreneurs. Pay attention to who you’re taking money from and aim for a reasonable valuation. Don’t be penny wise, pound foolish.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

AUGUST 26, 2015

After the market downturn on Monday I set several limit orders – primarily on tech holdings that I wanted to increase positions in – in my personal account and went back to meeting with entrepreneurs. Pay attention to who you’re taking money from and aim for a reasonable valuation. Don’t be penny wise, pound foolish.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

JULY 26, 2015

After the market downturn on Monday I set several limit orders – primarily on tech holdings that I wanted to increase positions in – in my personal account and went back to meeting with entrepreneurs. Pay attention to who you’re taking money from and aim for a reasonable valuation. Don’t be penny wise, pound foolish.

Marketing 40

Marketing Investment Bankers Valuation China 40

Berkonomics

OCTOBER 7, 2011

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO.

Valuation 54

Valuation Dilution Down Round Employee 54

Tim Keane

SEPTEMBER 17, 2009

.  (WAN is a trade group of angel organizations in Wisconsin; I'm on their board.)  Joe, a friend and colleague, is writing about the "great deals" in venture valuations that have been created by economic conditions.   It's inarguable that valuations are lower.   First, there's less money.

Wisconsin 60

Wisconsin Valuation Angel Investor Startup 60

Business Plan Blog

OCTOBER 8, 2013

Below is a list of the 10 most common mistakes, or sins, that we have encountered with entrepreneurs and past clients when trying to raise capital. Many first-time entrepreneurs or entrepreneurs with strong tech backgrounds waste too much business plan real estate on the technology section and only manage confusing the reader as a result.

Business Plan 67

Business Plan NDA Exit Strategy Valuation 67

Berkonomics

JANUARY 20, 2010

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor).

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69