Berkonomics

MARCH 30, 2010

There is a relationship between time and money that is more complex than most managers think. What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn. Email readers continue here.]

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

For Entrepreneurs

APRIL 7, 2011

Introduction This post aims to help startup CEOs optimize their funding strategy by examining how investors value startups, and explaining how to avoid the common cash management pitfalls. Note: The concepts in this post will likely be obvious to experienced CEOs and entrepreneurs.

Finance 167

Finance Startup Cost Entrepreneur 167

Ben's Blog

JULY 16, 2013

In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Berkonomics

MARCH 28, 2019

If so, the VC will contemplate a “down round” – that is: offering an investment where previous investors find their investments instantly worth less than their original value, even if the investments were made at high risk and years earlier. The enlightened professional investor.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. 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.

Marketing 70

Marketing Down Round Startup IRR 70

Both Sides of the Table

SEPTEMBER 27, 2010

You have an open source stack, cloud services for storage, processing & management and APIs for just about anything you want. These days that’s not the case and it’s a great outcome for entrepreneurs and for innovation. .&# Either you’re an angel or you manage professional funds. We all know that.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). composed of these investors and management. For you who fit that description, nice work. It’s an option, even though an expensive one.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Growthink Blog

MAY 23, 2011

The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. This venture capital financing - usually between $3 and $10 million - is the first of a number of rounds of outside investment over a period of three to five years. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Berkonomics

APRIL 6, 2012

If so, the VC will contemplate a “down round” – that is: offering an investment where previous investors find their investments instantly worth less than their original value, even if the investments were made at high risk and years earlier.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

ithacaVC

FEBRUARY 23, 2012

Luckily, I am not in charge of the internal finance function at our fund. My easy solution for VC firms would be to mark up or down the valuation of investments based only on new independently led outside rounds of financing. While not as bad as water boarding, this exercise always makes my stomach turn.

Valuation 49

Valuation Institutional Investors Marketing Down Round 49

Ben's Blog

JULY 16, 2013

In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

David Teten

AUGUST 7, 2019

“You could argue that when they were [raising] oversubscribed [VC rounds], Facebook, Google, Amazon, etc., The reverse also holds: a Value investment can become Momentum, and then follow with a down round. Momentum investors almost always argue that they’re investing in a “rock star management team”. Why, yes, they are.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. With the public markets down, these groups began writing down Unicorn valuations.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Genuine VC

FEBRUARY 9, 2011

Employee count is the strongest (but not a perfect) proxy for management’s and investors’ outlook on the business. Has there ever been a down round, inside round, a flat round, or a CEO change? What is the burn rate and how much cash is in the bank now?

Startup 146

Startup Burn Rate Technical Review Down Round 146

Both Sides of the Table

FEBRUARY 14, 2016

The billions of dollars managed by mutual funds, hedge funds, insurance companies, university endowments, pensions, foundations, sovereign wealth funds and the like need to find returns for their money. Why Financing in Falling Markets is So Damn Difficult. Why Down Rounds are Harder Than You May Think. And so it goes.

Valuation 150

Valuation Down Round Startup Later Stage 150

NZ Entrepreneur

JULY 30, 2020

One common challenge arises when founders are presenting their opportunity to multiple investors or are considering alternative financing strategies. Investors will be watching closely how you manage this process as it is an excellent indicator for how your team will manage challenging decisions moving forward.

Term Sheet 67

Term Sheet Due Diligence Valuation Down Round 67

This is going to be BIG.

MARCH 3, 2019

We do the work of sorting through the pitch decks of everyone and their mother, finding the diamonds in the rough, helping them turn an idea into something that looks like a company—and we do it for a fraction of the management fees of our later stage counterparts. It doesn’t take into consideration options, down rounds, or recaps.

Portfolio 110

Portfolio Burn Rate LP Distribution 110

Both Sides of the Table

MARCH 30, 2016

We cut price and doubled down on an aggressive campaign to call back people who had been on the fence given the economic climate of prices dropping. Our business continued to succeed and fortunately the management team agreed to keep their eyes on the ball of running the company while Mark and the board focused on investors.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Both Sides of the Table

JUNE 5, 2016

So in companies with high burn rates you can find the following: Seed funds wanting to sell the company / get a return or growth investors pushing for a recap or massive down round. Some examples There was an A-prime round of a high-profile deal coming together. 3VCs agreed to fund an inside round and cut costs.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

www.quora.com

SEPTEMBER 22, 2011

Even if your company succeeds, there is absolutely no guarantee your equity will not be wiped out in a down round. Even better, executives will negotiate the acquisition price of their company down; in exchange for a larger amount of post-acquisition retentio n equity and accelerated vesting.

Equity 40

Equity Employee Founder Cofounder 40