Feld Thoughts

AUGUST 12, 2011

When we were last with Dick and Jane on Finance Fridays, our fearless entrepreneurs were figuring out how to split up their founders equity and account for an investment from Jane. Feeling overwhelmed, Dick emailed his friend Josh, the CEO of an early-stage startup in Boulder, to see how they figured out all of this stuff.

Balance Sheet 136

Balance Sheet Forecast Cap Table Early Stage 136

Feld Thoughts

JULY 25, 2011

How Much Equity Should an Early Stage COO/CFO Get? We did this for a while, getting to most of the questions which has created a very nice corpus of answers to several hundred questions easily searchable by Lijit. For example: How Did We Get Our Idea For Our Startup? How Do You Negotiate a Carve Out With Investors?

Early Stage 124

Early Stage Equity Entrepreneur Startup 124

Feld Thoughts

MARCH 2, 2010

Y Combinator Series AA Equity Financing Documents (by WSGR). I’ll include a handful of early stage investors (both VCs and angels) in this effort. TechStars Model Seed Funding Documents (by Cooley). Founders Institute Plain Preferred Term Sheet (by WSGR). Series Seed Financing Documents (by Fenwick & West).

Finance 133

Finance Term Sheet Angel Investor Early Stage 133

Feld Thoughts

JUNE 30, 2011

Unfortunately, my impression of this particular person is that he’s not a constructive early stage investor but rather someone who is trying to prey on naive entrepreneurs. Entrepreneurs – beware. This is the kind of behavior that gives investors a bad name. Whenever the markets heat up, this kind of thing starts happening.

Entrepreneur 162

Entrepreneur Vesting Cofounder Angel Investor 162

Feld Thoughts

SEPTEMBER 27, 2011

In today’s installment of our convertible debt series, we cover a specific case where the company is acquired before the debt converts into equity. In the case of an early-stage startup that hasn’t issued preferred stock yet, the debt converts into stock of the acquiring company (if it’s a stock deal) at a valuation subject to a cap.

Conversion 96

Conversion Sales Later Stage Preferred Stock 96

Feld Thoughts

SEPTEMBER 8, 2010

Early stage VCs are often expected to play at least pro-rata in following rounds. When companies are successful, the early investors often (but not always) back off their pro-rata. But, once you start participating in later rounds, the expectation of your financial participation changes.

Entrepreneur 133

Entrepreneur Angel Investor Early Stage Pay to Play 133

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Feld Thoughts

DECEMBER 9, 2015

During these discussions, we reflected on the incredible collection of early stage VC firms we’ve invested in personally over the years. At the same time we discussed our later stage investment strategy. At the same time we discussed our later stage investment strategy.

Later Stage 70

Later Stage Early Stage Advisory Board Deal Flow 70

Feld Thoughts

JULY 14, 2015

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. The new money comes in at a pre-money valuation of $100, but includes a complete refresh of founder equity to 40% of the company. Here’s the scenario.

Recapitalization 70

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