Both Sides of the Table

FEBRUARY 15, 2016

This has led VC & entrepreneur bloggers alike to similar conclusions: start raising capital early and be careful about having too high of a burn rate because that lessens the amount of runway you have until you need more cash. I’m surprised how few entrepreneurs have this open conversation with their investors.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Both Sides of the Table

JANUARY 21, 2010

I recently read a post over on VentureHacks titled, “ Top Ten Reasons Entrepreneurs Hate Lawyers &# written by Scott Walker (who blogs on legal issues for entrepreneurs ). I know that people have an allergy to lawyers out of fear of being screwed. Many people start companies arse backwards. the link is here.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Both Sides of the Table

MAY 13, 2013

And a few teams of super talented, educated and bright entrepreneurs make a few mill. If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If in their 20′s. What could be more capitalist than that?

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

SEPTEMBER 5, 2012

” I applaud all efforts by people to take on this issue and especially be Adeo who – let’s be honest – was really the first champion of trying to make the VC world more transparent by launching TheFunded, which didn’t exactly endear him to VCs initially. We’re back to discussing convertible debt again.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

ReadWriteStart

SEPTEMBER 2, 2011

Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and a critical step in the development of their business. So in your first few rounds, try to raise money from as few people as possible and make sure they really will help.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I normally offer this advice in the capacity of really wanting to help entrepreneurs so please bear with me. Let’s say the company had raised $15 million.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

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. People seem concerned about valuation.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Feld Thoughts

FEBRUARY 9, 2016

And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. We entrepreneurs have been spinning that line for decades in every boom cycle. Then use the down round to clean up your preference overhang. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

The Equity Kicker

JANUARY 18, 2013

If you’ve been paying attention you will know that Nicholas Lovell and I are writing a book for entrepreneurs who want to raise venture capital. We are now preparing to shoot a promotional video which opens with five frustrations that entrepreneurs frequently encounter when they embark on the fundraising process, expressed as questions.

Liquidation Preference 159

Liquidation Preference Venture Capital Dilution Video 159

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Feld Thoughts

MAY 7, 2012

Down: Liquidation preference. Beyond demonstrating that older VCs also swear in public, many people believe that with a board seat comes great power and responsibility. Entrepreneurs – don’t get confused by the endless mumbo-jumbo. Know What The Fuck Is Going On : Board seat.

Liquidation Preference 143

Liquidation Preference Term Sheet Search Entrepreneur 143

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). My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A Dividend preference.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

www.readwriteweb.com

DECEMBER 29, 2011

Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business. So in your first few funding rounds, try to raise money from as few people as possible and make sure they really will help.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

Both Sides of the Table

NOVEMBER 4, 2009

I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X&# or not. Yet I often hear people asking about these types of opportunities express their questions to me whether I think this company is going to be a big hit. For most people it’s learn.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

David Teten

AUGUST 21, 2019

These entrepreneurs want to maintain two major options: 1) To raise VC later (or not), and/or. But you also can’t run the company forever, since investors need a liquidity event. So you’re stuck selling mid-term, which is frequently sub-optimal for the entrepreneur. “. RBI investors usually don’t take equity.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Both Sides of the Table

SEPTEMBER 28, 2013

It’s so much scarier than most people admit – even to themselves. But I’m working on a large team of people trying to figure out how to make micro improvements to a paid-search algorithm. A cautious person wouldn’t try to pry people out of Twitter right before their IPO to” join my cause!!”

Startup 417

Startup Dilution San Diego Stock Options 417

genylabs.typepad.com

SEPTEMBER 24, 2011

The Changing Face of Entrepreneurs. The Connected World of Entrepreneurs. Entrepreneur Magazine Blog. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. Business Week: Twitter for Entrepreneurs: 20 to Follow: Steve King.

Equity 40

Equity Technical Review San Jose Stock 40

K9 Ventures

JUNE 5, 2015

So although the symptom was that it felt tougher to raise Series A, the cause was a little deeper than most people realized. In addition, the competition for and the cost of hiring people, especially in the San Francisco Bay Area, has gone up dramatically. The Series A investors could afford to be more picky. the Venture Spiral).

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Both Sides of the Table

SEPTEMBER 6, 2010

We obviously attracted the wrong people for the wrong reasons and this led to a lot of disappointment. Option cultures are corrosive, create the wrong incentives and attract the wrong sort of people.&#. I see people’s private information for a living. I think they believed it, too. And I believe it.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

techcrunch.com

FEBRUARY 25, 2010

This is probably why investors’ case for a company to sell early f ocuses exclusively on the founder : in most early-stage acquisitions, the liquidation preferences and deal-sweeteners only work for investors and founders. There is no liquidation preference, severance payment or earn out. Each executive gets $5 million.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

Scott Edward Walker

APRIL 9, 2012

They are also typically granted certain additional economic rights (like Series A investors), such as pro-rata rights and a liquidation preference. In fact, in the Fenwick Survey , 9% of the preferred stock seed financings included a participating preferred liquidation preference (which is not founder friendly).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Both Sides of the Table

SEPTEMBER 2, 2009

No matter what I say some people are going to believe passionately on the other side of the argument. A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal. I think it breaks for most people after 3-4 years. I know this is a controversial topic. I believe this is wrong.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Both Sides of the Table

JULY 19, 2011

Middle People? Yet a critical mistake I see many entrepreneurs make is that they hand over too much control to their third-parties. I started with a personal example because I’d like you to have that mindset as we discuss the business people in your lives. As an entrepreneur I have one company to sell. Middle Men.

Term Sheet 319

Term Sheet PR Liquidation Preference Stock Options 319

Scott Edward Walker

AUGUST 31, 2011

Introduction This post was originally part of the “ Ask the Attorney ” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). We’re first time entrepreneurs, and we don’t know if this is standard practice and what we should do. These people need help in defining and pursuing their business goals.

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

Spencer Fry

APRIL 17, 2017

It’s a great conference with about 150 attendees for the “Starter Edition” -- lots of online course creators, info product folks, SaaS people, and others. We needed more people (not a ton, but 2-3) to really see our vision through and to build something we were proud of. More respect from other entrepreneurs.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Babbling VC

AUGUST 31, 2010

The term "I t's Not in My Interest to Screw You " is one I find myself commonly uttering in regards to entrepreneurs. I 'm simply trying to clarify the comment and the thoughts behind VC's not necessarily screwing entrepreneurs. Fred, Brad and Mark as well as many other VC's truly want to help the entrepreneur be successful.

Liquidation Preference 62

Liquidation Preference Semantic Dilution Reputation 62

K9 Ventures

MARCH 23, 2011

Before the era of capped notes, entrepreneurs preferred to do notes because the note essentially deferred the valuation of the company. It is in essence equivalent to being a Liquidation Preference that is typically seen in a preferred equity financing. There are multiple issues at hand here.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Pascal's View

DECEMBER 30, 2012

While every company founder makes trade-offs in building a company, few entrepreneurs appreciate the far-reaching implications of several critical decisions they will are required to make at the outset of a startup’s evolution. These sobering words are backed up with specific examples and recommendations.

Cofounder 34

Cofounder Liquidation Preference Vesting Equity 34

crowdSPRING Blog

MARCH 13, 2014

9 Ways Entrepreneurs Can Learn From Their Customers – crowdspring.co/1loBthB. Most people ignore them – crowdspring.co/1fWp19y. Good read for entrepreneurs & startup employees on liquidation preferences – crowdspring.co/1neVvzy. Most people ignore them – crowdspring.co/1fWp19y.

Social Media 96

Social Media Small Business Design Media 96

SoCal CTO

JULY 13, 2010

People tend to overvalue past investments when making forward-looking investment decisions. How-to learn about angel/vc term sheets - Gabriel Weinberg , June 28, 2010 I think every startup entrepreneur (and angel investor) should have a good understanding of financing term sheets. liquidation preference. Let's see why.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

VC Adventure

AUGUST 30, 2010

I think the answer to these questions are that 1) it’s not at all clear that this trend is as definitive as Graham suggests; 2) it’s a mixed bag for entrepreneurs (more positive in the short run, potentially negative in the long term); and 3) it’s clearly not a positive trend for early-stage investors. Good for investors?

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

Both Sides of the Table

FEBRUARY 14, 2016

I’d like to explain as best I can my opinion on what is going on because most of what I hear from entrepreneurs is not only wrong but is reminiscent of what I heard in 1997-2000. ” “This will be great for VCs and bad for entrepreneurs.” What is the True Sentiment of VCs? ” “Sure, prices are dropping.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

MARCH 3, 2013

Let me start by saying that Clayton is one of the most influential people on my thoughts about markets that led to both the concept behind my first startup and my main theses in investing. Today’s higher education is responding by making more courses online and available to people outside of physical boundaries. Venture Capital.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. I’m not sure why people don’t see that. It has both a “full rachet” and “multiple liquidation preferences.” Since 2009 I have been counseling people to offer discounts to the first angel investors. But how to get one?”

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

www.founderinstitute.com

MARCH 2, 2010

” Along with the managed business infrastructure, membership at Affinity Lab also means being a part of a community of coworkers a culture of people, a circle of friends, who are also in the process of developing their entrepreneurial businesses and organizations.

Term Sheet 40

Term Sheet Liquidation Preference Vesting San Diego 40

Austin Startup

AUGUST 1, 2017

TL;DR: In a market that has historically idolized huge, splashy financings and exits, an increasing number of entrepreneurs are realizing that everyone else’s definition of success — particularly among certain large VCs — isn’t necessarily aligned with their own. Most individual VCs can only support about 7–10 companies at a time.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

thestartuplawyer.com

FEBRUARY 24, 2010

Entrepreneurs often believe their startup company faces legal threats from only external sources. Even so, I believe the negative experience can end up producing a better entrepreneur if he or she applies lessons learned to current and future startups. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40