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. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

David Teten

AUGUST 19, 2019

I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital. I believe that Revenue-Based Investing (“RBI”) VCs are on the forefront of what will become a major segment of the venture ecosystem. Kauffman Foundation: Access to Capital for Entrepreneurs: Removing Barriers.

Revenue 60

Revenue Term Sheet Founder Technical Review 60

Both Sides of the Table

JULY 25, 2011

tl;dr version: If you’re an entrepreneur or VC or will be working in this industry - buy this. When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Or what “participating preferred&# stock is and how it can screw you. This article originally ran on TechCrunch.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

Startup Company Lawyer

AUGUST 31, 2012

Ted Wang believes that the “reason that capped convertible debt is the current market leader is that entrepreneurs have been conditioned over time to believe that convertible debt is (a) faster (b) cheaper and (c) better for them than equity investment.” Why convertible equity is better than preferred stock.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

YoungUpstarts

JUNE 26, 2020

The real issue here is that if an entrepreneur comes in to a pitch and goes on and on about how they’re going to build a billion dollar company in just a few years, most investors eyes tend to glaze over. Like Jerry Yang who started Yahoo, as investors we are looking for entrepreneurs who are obsessed with a new technology. In the U.S.,

Finance 205

Finance Silicon Valley Valuation Startup 205

Berkonomics

FEBRUARY 3, 2022

I also recall vividly one of my first investments where the entrepreneur backed out of a sale to a well-known investment company at the last second, declaring his intention not to sell “his” company. A personal experience that relates. For some, that comfort is worth forgoing building high equity value.

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

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. For later investments, the price is equity, with a percentage of the owner stock to be assigned to the investor. Type of stock assigned to the investor.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

Scott Edward Walker

JUNE 9, 2019

First let’s discuss pro rata rights (sometimes referred to as “participation” or “preemptive” or “right of first offer/refusal” rights) – which investors will typically request in connection with any venture capital financing. This is a huge red flag and founders should push back very hard.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

www.vccafe.com

MARCH 11, 2013

Venture Capital Cafe > Startup Resources (Updated Mar 2013). A group of Seedcamp entrepreneurs started a startup tools wiki for that purpose, and we thought it would be well suited here. Boilerplate Venture Funding Documents. National Venture Capital Association â?? Venture Hacks Angel List â??

Software Review 53

Software Review Technical Review Startup 53

Startup Professionals Musings

MARCH 7, 2015

One of the big questions that every entrepreneur struggles with is how much funding they should request from investors in the first round. On the other hand, venture capital organizations typically look for needs that exceed $2 million. entrepreneur funding request investors startup stage'

Preferred Stock 120

Preferred Stock Exit Strategy Equity Angel Investor 120

Startup Professionals Musings

MARCH 11, 2013

One of the first questions that I get from many entrepreneurs is “How should I set up my company to minimize my setup costs, tax liabilities, and risk of lawsuits?” Many entrepreneurs don’t realize that the tax entity election doesn’t have to match the legal entity. I’ll offer you a few simple rules of thumb.

LLC 234

LLC Nevada Delaware Limited Liability Company 234

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). Series Seed.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Scott Edward Walker

APRIL 9, 2012

Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. ii) why are convertible notes issued instead of shares of common or preferred stock?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Up and Running

MAY 23, 2016

To give you a better idea of what entrepreneurs in this industry are thinking about during each phase of the startup process, I interviewed SaaS entrepreneurs from all over the world, including our own COO Noah Parsons. Practical Market Research Resources for Entrepreneurs. venture capital. Step 2: Test your idea.

Software Review 74

Software Review Software Delaware Forecast 74

Feld Thoughts

JULY 27, 2011

When Jason and I set out to write Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist , we both agreed that we wanted to try to create as useful and durable a reference guide for entrepreneurs interested in raising a round of venture capital as we could. Series A Preferred Stock Purchase Agreement.

Term Sheet 136

Term Sheet Preferred Stock Merger Venture Capital 136

K9 Ventures

MAY 14, 2011

This is probably the very first group that an entrepreneur who is starting out may approach for some funding for his or her idea. Angels : Angels are individual investors, who are investing their own capital and doing so on a part-time basis. Common Stock. Convertible Note or Preferred Stock. Preferred Stock.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Both Sides of the Table

AUGUST 30, 2010

I’ve written about the topic of convertible debt at length before specifically about how angels & entrepreneurs should think about pricing. Clearly this is is a trend and a topic that is interesting entrepreneurs. a priced/valued preferred stock financing)? a priced/valued preferred stock financing)?&#.

Equity 319

Equity Early Stage Angel Investor Valuation 319

VC Cafe

OCTOBER 23, 2010

While there aren’t many issues to negotiate in simple equity financing at that stage, there’s been some debate in the venture capital and angel community on whether startups should use series seed documents or capped convertible debt. Preferred Stock Purchase Agreement Series Seed Form SPA.

Early Stage 79

Early Stage Term Sheet Preferred Stock Equity 79

www.quora.com

JANUARY 16, 2011

Find Questions, Topics and People Add Question Add Question Venture Capital Venture Capital Term Sheets Startups Term Sheets What are examples of good startup term sheets? Entrepreneur. The BVCA (British Venture Capital Association) docs are here, with a link to a term sheet [link] ets/fea.

Term Sheet 41

Term Sheet Startup Angel Investor Wiki 41

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell. Each round may raise between $5 million and $20 million or more.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

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

Growthink Blog

APRIL 7, 2010

It's just two successful entrepreneurs trying to improve on products in an established industry. million from three individual angel investors and one early-stage venture capital fund. The name "Series A" refers to the class of preferred stock that you sell to investors in return for their cash.

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

Gust

OCTOBER 5, 2011

Mandatory Conversion : The Notes and any accrued interest will be converted into the Company’s next issued series of preferred stock resulting in new money of not less than $1,000,000 (an “ Eligible Financing ”) at a discount to the per-share price of such preferred shares of 25% (the “ Conversion Price ” ).

Finance 79

Finance Preferred Stock Term Sheet Early Stage 79

Both Sides of the Table

MARCH 21, 2010

As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. Make the warrants for common stock and not preferred stock. This is the same as with employee stock options.

Warrant 298

Warrant Dilution Startup Stock Options 298

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. Indeed, some very pro-entrepreneur investors, like Fred Wilson , do not require no-shop provisions (see rule #4 in Fred’s post “ Competing To Win Deals ”).

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

Professor VC

JANUARY 17, 2008

I think the title of this post is a TV show, but fitting as there has been much debate in the venture community as to the whether angel investors are good or bad for entrepreneurs and VCs. One group charges entrepreneurs "an administrative fee" to present to the group. Touched by an Angel. Back to the panel.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Startup Company Lawyer

APRIL 22, 2009

Always looking for ways to better serve the entrepreneurial community, Wilson Sonsini Goodrich & Rosati is pleased to announce the release of the WSGR Term Sheet Generator , a publicly available online tool that allows entrepreneurs and investors to generate an initial draft of a term sheet for a preferred stock financing.

Term Sheet 39

Term Sheet Finance Preferred Stock Kentucky 39

Both Sides of the Table

APRIL 6, 2020

We have been advising a lot of entrepreneurs so I thought I’d “open source” some of the advice I have been sharing. The NVCA (National Venture Capital Association) Guidelines are below. I have found VCs to work collaboratively on these to help entrepreneurs in this time of need. This is another misconception.

Programming 279

Programming Affiliate SBA Government 279

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” Entrepreneurs generally don’t ask for this kind of language, but most sophisticated investors will insist on it in one form or another.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

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

Board Effect

MAY 10, 2019

If shares are diluted before the company begins raising capital, tracking the dilution of equity in a cap table prevents conflict and misunderstandings later on down the road. Cap tables come into play when it comes time for a startup to raise capital. Cap tables may also include derivatives such as warrants and options.

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

Altgate

MARCH 16, 2009

 So for the past few weeks I've been talking to venture capitalists, entrepreneurs, CEOs and other industry participants in these countries and learning a ton about the local startup ecosystems. .   In India and China there is no preferred stock.   In India and China there is no preferred stock.

Global 28

Global India United Kingdom 28

Professor VC

JUNE 6, 2016

I can just picture Mr. Rogers saying "Children, can you say participating preferred stock with an uncapped 3x liquidation preference and a full ratchet?" I work hard on mine and you work hard on yours and we all win (entrepreneurs, angels, and upstream VC's). It's great for entrepreneurs! I got over it.

Syndicate 28

Syndicate Syndication Cap Table Ratchet 28

Gust

MAY 24, 2012

Yet I’m skeptical that a widespread shift will occur anytime soon, and for reasons discussed below, as much as I admire and advocate for talented entrepreneurs, I believe it would be a losing proposition for nearly all involved. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

abovethecrowd.com

FEBRUARY 24, 2015

Buying into such a notion is dangerous – dangerous for the entrepreneur and dangerous for the investor. As a simple example, many investors and entrepreneurs do not realize that coupon or discount use is a contra-revenue event when it comes to revenue recognition. You must subtract it from your top-line revenue.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Gust

OCTOBER 3, 2011

For a first time entrepreneur trying to figure out the arcane world of startup financing, it can be very confusing to understand the roles that different types of investors play in funding promising companies, as well as the point in a company’s life at which they enter the stage. From +/- $1.5m

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Gust

AUGUST 6, 2014

two angel groups investing money in Series Seed Preferred stock purchase. a single venture capital fund putting in the full amount as Series A Convertible Preferred investment. Good personal chemistry with the entrepreneur. 25 individual angel investors funding a startup on a convertible note.

Term Sheet 170

Term Sheet Lead Investor Preferred Stock Common Stock 170