Both Sides of the Table

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Venture Capital Q&A Session

Both Sides of the Table

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. As a result I had to do a down round. We will continue to do more of this.

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Bad Notes on Venture Capital

Both Sides of the Table

On the phone … 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? About $1 million.

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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

Simply put – down rounds are very hard to achieve psychologically because insiders fight against them (rightly or wrongly) and outsiders have a mental gap that if your valuation is going down your company is forked up and they often just pass. Would they be willing to put a bridge loan in place if need be?

Burn Rate 383
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On Bubbles … And Why We’ll Be Just Fine

Both Sides of the Table

New investors hate down rounds. It’s what I love about entrepreneurship and about venture capital. They will enter the “triage phase&# of the market where they figure out which of their existing deals will survive. Many good companies will not get funded. Vultures will start circling looking for deals.

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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

Even if you have an interesting story to tell most investors won’t want to go through the brain damage of doing a “ down round ,&# which creates tension between them and early investors. They get a cheaper price, they wipe out much founder stock value and they reissue you new options.

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What Do Industry Insiders Think Will Happen in VC in 2016?

Both Sides of the Table

” 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. Most flat rounds. More down rounds. More structured rounds. Relatively harder to raise capital.

LP 150
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Changes in the Venture Capital Funding Environment

Both Sides of the Table

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.”