Both Sides of the Table

JULY 25, 2010

Rincon is part of the new breed of Seed Stage VCs and with the leadership of Jim Andelman has charted out the most authentic early-stage investment strategy in Southern California. Any SoCal entrepreneur raising early-stage money should put Rincon on their short list.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Both Sides of the Table

JUNE 5, 2015

If you add the pre-money valuation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-money valuation. Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. And a few teams of super talented, educated and bright entrepreneurs make a few mill. Let’s assume an early-stage company around for 2 years with limited traction.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

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. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

VC Adventure

NOVEMBER 14, 2012

This is anecdotal – I’ll try to validate it when the numbers are released – but where companies used to raise $3- $ 5M for their Series A, one response to higher valuations has been a much larger number of companies raising larger and larger Series A rounds (say $ 6M - $ 10M ).

Balance Sheet 77

Balance Sheet Valuation Post-Money Valuation Early Stage 77

VC Adventure

NOVEMBER 14, 2012

This is anecdotal – I’ll try to validate it when the numbers are released – but where companies used to raise $3-$5M for their Series A, one response to higher valuations has been a much larger number of companies raising larger and larger Series A rounds (say $6M-$10M). Ultimately this takes advantage of the larger raise.

Balance Sheet 48

Balance Sheet Valuation Post-Money Valuation Early Stage 48

Feld Thoughts

JUNE 2, 2015

The other day, Mark Suster wrote a critically important post titled One Simple Paragraph Every Entrepreneur Should Add to Their Convertible Notes. There are also some law firms whose standard documents are purposefully ambiguous to give the entrepreneur theoretical negotiating flexibility in the first priced round.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million. I don''t think early stage investors are taking enough risk.

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

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

Both Sides of the Table

AUGUST 1, 2010

Short summary of my posts: 1. There is a structural reason that VCs are investing at early stages, 2. Many firms do it in a way that can be more detrimental to entrepreneurs. If you don’t understand the concept of “signaling&# please read the blog post I wrote on Understanding VC signaling.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. So they recapitalize the company.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Agile VC

DECEMBER 6, 2012

I was talking with an entrepreneur recently about this phenomenon. Well at this juncture Startup X’s valuation is presumably a lot higher than it was at the Series A, maybe even 5-10x+ higher. For example Acme III might be willing to invest in a Series B or C stage company in Year 4 of the fund (e.g.

LP 178

LP Balance Sheet Differentiation Limited Partner 178