VC Cafe

OCTOBER 31, 2022

It’s a tough time for a lot of startup founders right now. Many companies are now having to resort to tough measures in order to stay afloat, including layoffs, down rounds and tough terms from current investors. Venture-Capital Firms Buy Up Public Tech Stocks as Startup Market Stalls (Source: WSJ ).

Founder 173

Founder Technical Review Down Round Liquidation Preference 173

ReadWriteStart

JUNE 1, 2020

Under this category, you have the angel investors who would invest their own money and Venture Capital or VC firms, who manage funds aimed towards specific startup sectors and stages. I have interacted with a lot of founders who funded their initial business expenses through credit cards. Equity investors. Debt investors.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

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 60

Venture Capital Valuation Stock NDA 60

The Equity Kicker

JANUARY 25, 2016

On Friday it seemed like everyone in the venture capital industry was again reading about market turmoil, this time the news is that angel investors are pulling back and valuations taking a hit. I read it too, because it’s a big deal.

Venture Capital 60

Venture Capital Angel Investor Startup Participating Preferred 60

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. On the other hand, exits at lower prices are easier with these providers of capital.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. I said that at the Founder Showcase, too. In any given year there are about 50 venture-backed companies or so that are bought for $100 million or more. New investors hate down rounds. some founders lose their life savings.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

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. Finally, even if they could bring themselves to offer you a major down round, the more sophisticated investors know it’s fool’s gold.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Berkonomics

AUGUST 3, 2023

The subject of raising money is critical to many businesses and a passing option to others, depending upon the capital efficiency of the enterprise. Venture, private equity and more: Here we lump a large number of investor classes into one. For those of you who fit that description, nice work.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

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. Patrick Collison , self-made billionaire founder of Stripe. Bill Gates , founder of Microsoft. A good way to think about valuation in seed/pre-seed is to reverse engineer the next round.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

VC Cafe

FEBRUARY 27, 2024

A founder asked me what makes a $2M round “pre-seed”? And why do we still sometimes hear about pre-seed rounds that look more like a series A in pricing and size? What’s the difference between an angel round and pre-seed round and why do I believe we’ll see more pre-seed rounds taking place in 2024?

Valuation 186

Valuation Software Review Generative AI Technical Review 186

YoungUpstarts

JUNE 26, 2020

Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. I always caution entrepreneurs not to take too high a valuation in any round because it sets very high expectations for the next round. He is also a venture partner at several VC firms.

Finance 180

Finance Silicon Valley Valuation Startup 180

Both Sides of the Table

FEBRUARY 4, 2016

” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. 61% of VCs said valuations were “marginally down” in Q4 of 2015 but 91% expect price decreases in the next two quarters.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

The Equity Kicker

MARCH 24, 2015

Everyone loves a high valuation and it’s natural for founders to want to minimise dilution. They will most probably go on to raise multiple rounds of venture capital after all. And don’t forget the prime directive of fundraising strategy: set things up so that you never do a down round.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

Berkonomics

MARCH 28, 2019

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later you may need to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. What VC’s can and cannot do.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Growthink Blog

MAY 23, 2011

With this seed capital – more often than not totaling between $100,000 and $1,000,000 - the company accomplishes a number of key technical milestones, gets a beta customer or two, and then goes on a "road show" to venture capitalists around the country for capital to “scale” the business. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). If you don’t, please educate yourself on this site, Venture Hacks and the term sheet series by Brad Feld/Jason Mendelson, among other places. under $500K). Series Seed.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Berkonomics

JUNE 8, 2017

The subject of raising money is critical to many businesses and a passing option to others, depending upon the capital efficiency of the enterprise. Venture, private equity and more: Here we lump a large number investor classes into one. For you who fit that description, nice work.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? We raised a seed round. You’ll find out the minimum when the next round is raised. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? This is why Party Rounds in VC suck.”.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

SEPTEMBER 27, 2010

There are real changes in the venture capital industry and it would have been fun to talk about them. And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge. The hardest thing is deciding what the right time to allow founder liquidity is.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Berkonomics

APRIL 6, 2012

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later these businesses will have to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

VC Cafe

JUNE 10, 2022

For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. According to new research by Pitchbook , the trickle down effect has already started in seed and series A startups with round sizes and valuations shrinking in size compared to 2021.

Valuation 151

Valuation Marketing Venture Capital 151

Both Sides of the Table

JUNE 5, 2016

Non VC Growth Rounds. The other major trend of 2012–2015 was the entrance of “non VCs” into late-stages of venture capital , which mostly consisted of hedge funds, mutual funds, corporate investors, sovereign wealth funds and even LPs doing direct deals. The market eventually slowed down. Some called this “buying logos.”

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Feld Thoughts

SEPTEMBER 9, 2015

Some will demonstrate strategically justifiable metrics and have fantastic ‘up round’ exits; others may see liquidation preferences kick in which will negatively impact founders and employees; others may fulfill the adage “IPO is the new down round” , which has been the case for more than half of the public companies on our list.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

VC Cafe

JANUARY 29, 2024

It’s easy to find bad news about venture capital these days. In other words, the venture capital bust has only just started. 2023 was a rough year for Venture Capital and for startups, and it might get even worse. Global venture funding fell 42% year over years to $248.8

Generative AI 171

Generative AI Global Venture Capital Valuation 171

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) Sales people cost money, and when they’re not bringing in revenue, their wandering in the woods is time consuming, cash-draining and demoralizing.

Lean 244

Lean Silicon Valley Startup RSS 244

Hippoland

NOVEMBER 13, 2016

The #1 problem with the venture capital game, in general, is that *actual success* is measured over decades not years. If a company raises a good round, it gets marked up to the new value. And if a company takes a down-round, it gets marked down. These founders are really selling.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Scalable Startup

JANUARY 27, 2011

If you’re venture funded, things get kind of ugly -unhappy board members, cut off from communications, down- rounds to keep you going, or no more funding. Many early stage founders aren’t sure how to handle this requirement for success. And all those other depressing clichés. What about users? Press Mentions?

Revenue 22

Revenue Early Stage Down Round Software Review 22

VC Cafe

JANUARY 2, 2023

As Fred Wilson put in in his post ‘What will happen in 2023’ “I believe that ‘new normal’ is more or less where we were in 2015 where seed rounds were done around $10mm, A rounds were done around $15mm to $25mm, B rounds were done around $25mm to $50mm, and growth rounds had a cap at 10x revenues.”

Valuation 158

Valuation Down Round Venture Capital 158

Berkonomics

JANUARY 20, 2010

This post will be perhaps a bit longer than usual, but certainly of great interest for those with interest in or have need for more capital… This stage is critical to many businesses and a passing option to others, depending upon the capital efficiency of the enterprise. For you who fit that description, nice work.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

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. About this same point in time, the journalists that focus specifically on the venture capital industry noted something quite profound.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Altgate

MARCH 8, 2009

Later stage funds will end up owning more of their portfolio companies via down rounds and ultimately should see ok returns. The early stage investors are going to take a huge hit since many of their portfolio companies will be capital starved and will be forced out of business or into fire sales. But some will be saved.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

VC Cafe

NOVEMBER 30, 2022

The 2022 Founders Factories report by DealRoom and Accel shines a spotlight on the startup clusters that produced most unicorns across Europe and Israel, and then tracks the alumni of those unicorns to test where the talent goes to found their next companies. London and Tel Aviv are home to the most founder nurturing unicorn startups.

Europe 97

Europe Balance Sheet Valuation 97

A Crowded Space

DECEMBER 9, 2013

For me, it’s changed the way I look at my job as an investor in venture capital. So, here are my lessons learned and applications to venture: . In VC: I see a fair number of deals that have reached some point of stagnation that are seeking a flat or down round. This is bad. Tread very carefully. .

Technical Review 68

Technical Review Deal Flow Balance Sheet Down Round 68

www.paulgraham.com

APRIL 28, 2010

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. Few startups get it quite right.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Both Sides of the Table

FEBRUARY 14, 2016

Put simply, it’s really hard to build a strong company when all of your competitors are giving away free s**t fueled by venture capital chasing winner-take-all returns. Why Inside Rounds are Difficult? Many founders don’t understand why inside rounds are so difficult. Down rounds are hard.

Valuation 150

Valuation Down Round Startup Later Stage 150

Scalable Startup

FEBRUARY 1, 2013

A big part of why venture capital actually is important and enduring is because the public market is flighty and late-stage investors are flighty, and customers for that matter are flighty, and so you can’t — if you are running one of these companies you can’t — you just can’t rely on people being balanced.

Software Review 22

Software Review Startup Venture Capital Stock 22

VC Cafe

MAY 18, 2022

venture capital and private equity) the VC index (by Refinitiv) shows a nearly 40% decline. While Q1 2022 looked normal, in venture, there’s a lagging effect in pricing, and deals that get announced in Q1 and even early Q2 2022 might have been signed in Q4 2021. Down rounds are coming.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190