Down Round, Founder and Metrics

Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

JUNE 5, 2011

I’ve decided to take all of my private conversations and subjective points-of-view on the topic and make them public in a keynote speech at the Founder Showcase in San Francisco on June 15th. Another firm we saw tried to raise $15 million at a $60 million pre-money with similar metrics. Here’s the problem.

Pre-Money Valuation

Pre-Money Valuation Valuation Silicon Valley Stock

Bad Notes on Venture Capital

Both Sides of the Table

SEPTEMBER 18, 2014

Him: But when I raised my first round we didn’t know how to price the company. There were no metrics. How will you price the next round? Your A round? Him: On metrics. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round.

Venture Capital

Venture Capital Liquidation Preference Valuation Term Sheet

Advice for startups in a downturn (May 2022 Edition)

VC Cafe

MAY 18, 2022

Down rounds are coming. Advice for startup founders (consolidated). CEOs and founders need to look this harsh reality square in the eyes and start planning to ensure survival today. Startup founders should adjust expectations accordingly. "Tourist" founders & investors go away.

Term Sheet

Term Sheet Startup Valuation Ukraine

Twitter Link Roundup #178 – Small Business, Startups, Innovation, Social Media, Design, Marketing and More

crowdSPRING Blog

MAY 10, 2013

The critical metrics for each stage of your SaaS business | by Lars Lofrgren – [link]. Startup Founders: Don’t Forget to Sell the Dream | by Jason Shen – [link]. The Damaging Psychology of Down Rounds | by Mark Suster – [link]. 10 Myths about Startups – [link]. “Embrace skeptics.

Social Media

Social Media Small Business Design Media

On the Road to Recap:

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. Their own ego is also a factor – will a down round signal weakness?

IPO

IPO Term Sheet Silicon Valley Valuation

Current Startup Market Emotional Biases

Feld Thoughts

APRIL 21, 2016

. “Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. 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

Marketing Down Round Startup IRR

Bad Notes on VC

Gust

SEPTEMBER 17, 2014

Him: But when I raised my first round we didn’t know how to price the company. There were no metrics. How will you price the next round? Your A round? Him: On metrics. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round.

Liquidation Preference

Liquidation Preference Valuation Term Sheet Stock

People-First Capitalism

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. We’ve kind of designed the kind of growth that we want.

Silicon Valley

Silicon Valley Hosting Rhode Island Design

What I Would Have Said at TechCrunch Disrupt

Both Sides of the Table

SEPTEMBER 27, 2010

And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge. Chris Sacca talked about how a $20 million exit can change a founder’s life and that shouldn’t be scoffed at. That’s awesome. I had two kids and a rental house.

Liquidity Event

Liquidity Event Silicon Valley Seed Stage Finance

Unicorpse

Feld Thoughts

SEPTEMBER 9, 2015

We basically doubled the number of unicorns in the past year and a half,” says Aileen Lee, the founder of Cowboy Ventures, who has herself become a mythic creature in the Valley after coining the term. If private capital is no longer available in the future, these companies will seek a public offering or acquisition.

Liquidation Preference

Liquidation Preference Burn Rate Balance Sheet .Net

People-First Capitalism

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. We’ve kind of designed the kind of growth that we want.

Silicon Valley

Silicon Valley Hosting Rhode Island Design

In Venture Capital, Should You Be a Momentum or a Value Investor?

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. The reverse also holds: a Value investment can become Momentum, and then follow with a down round.

Venture Capital

Venture Capital Valuation Stock NDA

How NZ entrepreneurs can up their capital raising game

NZ Entrepreneur

JULY 8, 2019

If a valuation is too low, the founders become over-diluted over time and will struggle to do a later series A or B raise if they’re sitting at single digits – global venture capitalists (VCs) won’t touch this scenario. A simple metric – when I registered my first company in 2004, the naming space was wide open. Valuations.

New Zealand

New Zealand Entrepreneur Valuation Dilution

Startup Fairy Tales and Other Tall Tales That Venture Capitalists Tell

Growthink Blog

MAY 23, 2011

Usually unbeknownst to all, the decision around pursuing or accepting a venture capital round will be the most important factor in determining the investment return for the founder and the original angel investors in the company. It is driven by the following: • The Best Metric for the Health of a Company is Cash Flow.

Angel Investor

Angel Investor Venture Capital Sweat Equity Cram Down

The Future of Startups 2013-2017

Scalable Startup

FEBRUARY 1, 2013

And so the other reason that I am very interested in delving deep into this space is that it seems like IPOs like Workday, Palo Alto Networks are sort of — they have metrics and analytics that Wall Street understands, more so than a Facebook; like “We are going to sell X number of this in the next year.”

Software Review

Software Review Startup Venture Capital Stock

The VC Death Trap

Rob Go

JUNE 1, 2016

Where I think funds do start having hard conversations around follow-ons is when they need to lead inside rounds or protect themselves in down rounds. This might not be true of all VC funds, and I know a number of funds that have a mantra that they treat follow-on rounds like “a new deal”.

Term Sheet

Term Sheet Portfolio Valuation Warrant

StartUpRoar