Both Sides of the Table

SEPTEMBER 5, 2012

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Startup Professionals Musings

JANUARY 27, 2012

Remember a term sheet agreement is not a deal until the check clears. Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. However, there is no set pattern of terms an entrepreneur might be able to anticipate from either.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Agile VC

APRIL 17, 2011

liquidation preference, 6% accumulated dividend (1). Series A-1 Preferred. liquidation preference, 6% accumulated dividend. liquidation preference, 6% accumulated dividend (1). Series B-1 Preferred. Sequoia & General Catalyst, same terms as Ser B. Series C Preferred.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

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.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

SEPTEMBER 26, 2015

Most entrepreneurs looking for an investor can tell you how much money they need, but few have given much thought to what they are willing to give up for it. Still, no one wants the terms to be so complex that the deal never closes. In very early startups, which have no valuation, the term sheet may specify a convertible note.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

Startup Professionals Musings

SEPTEMBER 14, 2010

Remember a term sheet agreement is not a deal until the check clears. Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. However, there is no set pattern of terms an entrepreneur might be able to anticipate from an angel, either.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Feld Thoughts

JUNE 10, 2022

So, as an entrepreneur, I encourage you to deal with reality. Rather, when you have a choice between a financing at a lower valuation and a financing with all kinds of crazy structure to try to maintain a previous valuation, negotiate the best price you can but do a clean financing with no structure. and a bunch of other things.

Down Round 162

Down Round Ratchet Liquidation Preference Participating Preferred 162

Up and Running

AUGUST 17, 2015

As I read stories of college dropouts who had successfully sold tech companies, or entrepreneurs with innovative ideas who made it big on Shark Tank, it became clear that there was no set path to startup success. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on).

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Gust

OCTOBER 17, 2011

Remember a term sheet agreement is not a deal until the check clears. Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. However, there is no set pattern of terms an entrepreneur might be able to anticipate from either.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Steve Blank

MARCH 16, 2016

As part of the deal you signed with your investors was a term specifying the Liquidation Preference. The liquidation preference determines how the pie is split between you and your investors when there is a liquidity event. The party line is “We’re building a company for long-term success.”.

Liquidity Event 120

Liquidity Event Founder Liquidation Preference Venture Capital 120

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. Tip 4: Really Understand Key Terms. Once you get the term sheet make sure you know how to read it. Once you have a term sheet you are happy with, don't over negotiate.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

Both Sides of the Table

SEPTEMBER 16, 2010

This is the fourth article in a series on what it takes to be a great angel investor (and why this should matter to entrepreneurs). VCs will often put in punishing terms to those investors unwilling to dip their hands into their pockets. more senior to you) might be piling up liquidation preferences and tilting returns in their favor.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Deal Flow 283

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 ). They’ll help you ensure that any money you raise doesn’t come with surprise terms that are hidden in legalese. the link is here.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

The Next Web

FEBRUARY 15, 2015

If you haven’t read the first part on equity term sheets, I strongly recommend doing so before moving on. For a general introduction to term sheets and the trade-off between high valuation and complex investment structure, please refer to the introductory post to the guide. Entrepreneur Analysis and Opinion'

Term Sheet 60

Term Sheet Equity Liquidation Preference Valuation 60

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

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

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. Objectively. I see that all the time.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Scott Edward Walker

SEPTEMBER 14, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. The Investors’ Right to Walk VC Term Sheets Are Non-Binding. VC Term Sheets Are Conditional.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

Startup Professionals Musings

FEBRUARY 3, 2018

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. If the entrepreneur wants total control of their own venture, with no one looking over their shoulder, they should work within the limits of their own resources, a process called bootstrapping.

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

Feld Thoughts

MAY 7, 2012

And even though a term sheet might be four to eight pages long and the definitive documents might be 100 pages or more, other than economics, there are really only three things a VC needs in a deal. Down: Liquidation preference. Entrepreneurs – don’t get confused by the endless mumbo-jumbo. Or read blogs.

Liquidation Preference 143

Liquidation Preference Term Sheet Search Entrepreneur 143

Startup Professionals Musings

JULY 3, 2014

As an Angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and then disappear into the sunset. Angel and venture capital money always comes with strings attached, starting with the obvious ones outlined in the term sheet for the deal. Would you do that if it was your money?

Term Sheet 237

Term Sheet Advisory Board Liquidation Preference Startup 237

Feld Thoughts

FEBRUARY 9, 2016

Much of it is very short term focused and, like a giant tractor beam, draws the conversation into a very short time horizon (as in days or weeks). And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

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 under $500K).

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. Tip 4: Really Understand Key Terms. Once you get the term sheet make sure you know how to read it. Once you have a term sheet you are happy with, don't over negotiate.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

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. As an angel investor, I have never asked for a liquidation preference on conversion that is greater than the dollars I’ve invested. Go read it – I’ll wait.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Startup Professionals Musings

AUGUST 16, 2015

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. If the entrepreneur wants total control of their own venture, with no one looking over their shoulder, they should work within the limits of their own resources, a process called bootstrapping.

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

Altgate

OCTOBER 8, 2009

The two most popular posts remain this one on term sheet negotiation and this one on venture debt , although this one on convertible debt is giving them a run for their money. Tips: $75 HOT All-Hands Team Meeting Board Management Tips For Startup CEOs Customer Support 2.0

Term Sheet 39

Term Sheet Technical Review Michigan Liquidation Preference 39

Scott Edward Walker

DECEMBER 29, 2011

House Passes Crowdfunding Bill: FAQ’s For Entrepreneurs 3. What Is A Liquidation Preference? What Makes A Great Entrepreneur? What Are Exploding Term Sheets And No-Shop Provisions? What’s It Like Working At A Major New York City Law Firm? How To Hire A Superstar Engineer For Your Startup 5.

Antidilution 66

Antidilution Liquidation Preference Term Sheet New York City 66

David Teten

AUGUST 21, 2019

These entrepreneurs want to maintain two major options: 1) To raise VC later (or not), and/or. 2) To sell their businesses when they want – early, mid term, or never.” . But you also can’t run the company forever, since investors need a liquidity event. Paypal) or expensive technical R&D (e.g.,

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Altgate

JANUARY 5, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! Tips: $75 Killver VC Pitch Deck Not much to learn here. Bookmark the permalink.

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28

ithacaVC

JUNE 3, 2015

The punishment comes in the form of “unjust” liquidation preference that the note holders end up with when they convert at a valuation cap that is way lower than the valuation of the actual round. Each share of Series A will have a liquidation preference of $1.00 (assuming 1X preference, which is normal).

Liquidation Preference 40

Liquidation Preference Pre-Money Valuation Dilution Valuation 40

Berkonomics

MAY 22, 2014

In most cases, those entrepreneurs choosing to raise capital using PPMs retain specialists (many of whom are lawyers) to write their PPMs – a rather expensive undertaking. Unfortunately, upon completion of the PPM, the first thing that entrepreneurs tend to do is sell shares to friends, family, friends of friends and other acquaintances.

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

Up and Running

DECEMBER 30, 2015

When raising your first round of capital, there are a few common mistakes many entrepreneurs make. Founders should pay attention to the liquidation preference in the term sheet to ensure it does not become detrimental to them in a less than favorable exit. Better yet, get legal counsel. Vishal Shah, NoPaperForms.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

genylabs.typepad.com

SEPTEMBER 24, 2011

The Changing Face of Entrepreneurs. The Connected World of Entrepreneurs. Entrepreneur Magazine Blog. I wont bother going into details on start-up financing terms ( see this post for an overview of typical VC terms) except to say if you dont know and understand: the firms cap table and valuation. Disclosure Policy.

Equity 40

Equity Technical Review San Jose Stock 40

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. Now … these are stock options and not restricted stock so you’ll likely be taxed at a long-term capital gains rate. Tags: Entrepreneur Advice Startup Advice.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418