Both Sides of the Table

FEBRUARY 6, 2013

But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders” My idea startup team is heaving on tech personnel but also has strong product management. I don’t think VCs care as much about co-founders & economics as people think.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Both Sides of the Table

SEPTEMBER 30, 2011

when is the right time to hire your first sales employee? junior vs. senior? brains vs. relationship? how can you evaluate a good sales person? how do you know one when you see them? How much to compensate them? how to structure the comp plan. How do you get access to customers? getting past the assistant. when to call. how to handle intros.

Software Review 300

Software Review Sales Due Diligence Startup 300

Both Sides of the Table

AUGUST 12, 2010

In the VC & Private Equity world there’s a small number, too, with one of the most respected being PEHub. But there are also going to be those companies that require capex and growth equity (Zynga, Facebook, etc). That’s thanks to Dan Primack , founding editor. Dan also agrees with this.

Seed Stage 232

Seed Stage Valuation Private Equity Venture Capital 232

Both Sides of the Table

OCTOBER 1, 2009

We spent our future since the equity was artificial. It affects even B2B companies because ultimately most must sell to companies who sell to consumers and if they suffer they cut back on suppliers. Consumer spending is where I’m dubious. So we loaded up on flat screen TVs, multiple generations of iPods and trips to Hawaii.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Both Sides of the Table

MAY 24, 2018

You company is the product and you’re selling an equity ownership in your company but much more broadly you’re selling trust & confidence that you’re going to build something enormously valuable and that you’re going to be enjoyable to work hand-in-hand with over the coming decade of each other’s lives.

Technical Review 314

Technical Review Due Diligence Partner Term Sheet 314

Both Sides of the Table

SEPTEMBER 17, 2011

Dilute your cash, equity or both. But it will not help your business grow faster. What will it do? Focus the most senior person in the company’s time away from critical decision making on daily business. Create hassles for post-merger integration of technology or teams. Lead to bad blood on your existing team.

Operations 292

Operations CTO Hire Startup Early Stage 292

Both Sides of the Table

AUGUST 3, 2010

I can save tons of development time and I think I can buy it for all equity. I’m not saying there are never reasons to buy another company for cash and/or equity. A close friend of mine in LA who is 3 years into his startup called me about 2.5 It has awesome features that my main competitor doesn’t have.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

MAY 28, 2018

It’s true that some later-stage private equity firms like to fund “roll ups” (a company that acquires many related companies in it sector), but this is seldom the domain of VCs. Every VC knows that the amount you raise is often a proxy for your valuation.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

MARCH 2, 2011

I was thinking back to a few previous “insider baseball&# blog debates that raged for several weeks: AngelGate (aka Bin38 secret cabal), convertible debt vs. equity, bubble vs. not, and now the AngelList discussion. Should entrepreneurs have convertible debt or priced equity? Probably we all have different filters. Same thing.

Email 287

Email Bankruptcy Equity Technical Review 287

Both Sides of the Table

JUNE 30, 2011

Hedge funds and growth equity firms returning to their traditional segments of the market. Return to focused strategy for investors where Micro VCs have a more established position in their market and traditional early-stage VCs become more comfortable waiting for products to be completed as FOMO (fear of missing out) subsides.

Venture Capital 289

Venture Capital Early Stage Valuation Angel Investor 289

Both Sides of the Table

JULY 16, 2010

So even within the “alternative class&# our LPs are looking at other asset investment choices such as distressed buyout funds, private equity or hedge funds. Then there is a certain size market for A round VCs, B round VCs and growth equity investors willing to put $50 million to work. VC will shrink. Oh yes it will.

LP 311

LP Technical Review Early Stage Silicon Valley 311

Both Sides of the Table

JULY 12, 2011

Lastly, he touched on the distrust of equity following the bubble in 2000, and that, particularly on the East Coast, people need to see good exits and good exits that reward employees. He added that current Internet trends favor NYC, given the reliance on creativity, design, and the importance of consumers – all areas in which NYC excels.

Technical Review 281

Technical Review Artificial Inteligence Cofounder API 281

Both Sides of the Table

AUGUST 26, 2010

Let’s say a senior member of your team demanded a pay raise (cash or equity) and you didn’t like the way they approached you. I’d rather choose to be zen and maintain my public reputation. This also applies to internal company decisions. Sometimes the right thing is to firmly but politely resist the increase.

Demand 340

Demand Equity Reputation Hosting 340

Both Sides of the Table

MAY 27, 2013

You may know how much to pay in cash or equity for your new VP Engineering. And you can often throw in a separate action like approving stock-option grants, getting approval for CAPEX spend, discussing fund raising timing – whatever. Always seek input. You may have an opinion on your market-entry strategy for Europe.

Advisory Board 365

Advisory Board CTO Hire Fractional CTO Los Angeles 365

Both Sides of the Table

FEBRUARY 23, 2015

He wants a chance at changing life’s circumstances with building equity value that might free him and his family from the rat-race of 529 accounts, property taxes, summer-school tuitions and even spending some cash on aging parents. He still has the dream. He has the hunger. I’m not saying it’s even desirable.

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

Both Sides of the Table

JULY 26, 2015

If you hire somebody with 3 kids and who doesn’t have a lot of savings you’re naturally going to have somebody who cares more about cash than equity even though you REALLY WANT everybody in your company to have the same motivations as you.

Oauth 150

Oauth Software Review Technical Review IPO 150

Both Sides of the Table

NOVEMBER 19, 2009

He would have found somebody technical and inspired that individual to work for equity or deferred payment. But “he didn’t have the budget to hire a developer until he had raised money!&#. I said that was my point. “A real entrepreneur would have done it anyway. Real entrepreneurs are contagious.

Entrepreneur 414

Entrepreneur Fractional CTO Technical Review CTO Hire 414

Both Sides of the Table

SEPTEMBER 29, 2013

And of course syndicates unleashes many unintended consequences by creating a new breed of self-promotion amongst angels who previously told you how much they loved their 100 deals because it benefited their equity – now some actually have even more riding as carry – so as always caveat emptor.

Syndicate 356

Syndicate Syndication Cofounder Early Stage 356

Both Sides of the Table

SEPTEMBER 28, 2014

So money spent should add equity value or create IP that eventually will. Think: If you raise $10 million at a $30 million pre ($40 million post) that investor needs you to exist for at least $120 million (3x) to hit his or her MINIMUM return target his or her investor’s are expecting.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Both Sides of the Table

SEPTEMBER 12, 2010

Many of the growth equity firms have had outbound dialing programs for years. Growth equity firms typically target profitable businesses that are often not technical in nature. Perhaps outbound dialing / emailing programs worked well for growth equity firms in their core business. These kind of companies were seldom startups.

Programming 294

Programming Entrepreneur Private Equity Equity 294

Both Sides of the Table

SEPTEMBER 5, 2012

This time by the efforts of Adeo Ressi to introduce a new kind of structure called “ convertible equity.” 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.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

APRIL 6, 2014

I know that in later-stage growth equity deals some firms even hire third-parties who will do the reference calls. I have been part of one deal where this happened and the level of detail from a professional reference checker was unbelievable.

Technical Review 302

Technical Review Hiring Later Stage Employee 302

Both Sides of the Table

APRIL 19, 2011

If you need money to even hire a developer [means you cannot even excite one person to put in some sweat equity – not a good sign about your ability to motivate people.]. Passion is infectious – people respond to it. Confidence is good, cockiness is not. •

Acquisition 304

Acquisition Warrant Customer Term Sheet 304

Both Sides of the Table

MAY 19, 2018

The buyer is shopping for equity in startups and the seller is looking for cash in exchange for equity and shared governing control of his or her company. So WTF am I supposed to do when an investor asks for access to my data room if I don’t have one? For starters you have to realize that fund-raising is a sales process.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Both Sides of the Table

SEPTEMBER 23, 2010

Convertible or equity? Have you looked at competition? How well financed is the competition? What is their market traction? How much are they raising? How much is soft-circled (committed)? At what valuation? Cap or warrants?

Entrepreneur 292

Entrepreneur Technical Review Stealth Valuation 292

Both Sides of the Table

SEPTEMBER 10, 2021

that broadly covers decentralized applications and possibly even decentralized autonomous organizations (which could imply that in the future VCs need to be more focused on token value and monetization than equity ownership models?—?we’ll Investments in the intersection of data, technology and biology.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

SEPTEMBER 18, 2014

“But lawyers will charge much more for equity.” Try doing THAT with equity. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. And so forth. ” Not in my experience. Lawyers don’t make money on your seed round in any instance. Employment.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

MAY 23, 2010

a loan) that is later converted to equity at the time of the next financing. If no financing happened then this “note&# may not be converted and thus would be senior to the equity of the company in the case of a bankruptcy or asset sale. It starts as a debt instrument (e.g.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

Both Sides of the Table

MAY 9, 2011

Give them a large sum of equity. It is not uncommon to see startup founders walk before raising capital and take large pieces of equity with no vesting. I say, “go ahead & take the leap&# if you want to start a company (many people don’t want to – that’s OK, too.). Hire your co-founder. Vested over 4 years.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

Both Sides of the Table

JUNE 22, 2018

Let’s say a senior member of your team demanded a pay increase (cash or equity) and you didn’t like the way he or she approached you. If you compromise but then display “sour grapes” to the other party then you not only didn’t get the result you wanted but you’ve also created ill will with other people and you lose twice.

Equity 199

Equity Hosting Demand Cost 199

Both Sides of the Table

MAY 19, 2010

Of course none of these funds (my own included) want to be lumped into just one category because we all move across the spectrum.

Partner 240

Partner New York City Cofounder Syndicate 240

Both Sides of the Table

MARCH 6, 2010

The upside for entrepreneurs is the equity in their business. True, we’re paid better than many startup executives on an annual basis. But I know many young partners in this business who have never gotten a “carry&# check. The upside for VCs is this carry.

Technical Review 312

Technical Review Due Diligence Spain Warrant 312

Both Sides of the Table

AUGUST 18, 2009

To be clear – it is not about being stingy with or hoarding equity – it is about having a prenuptial agreement. I believe that it very important to spread the equity. He was concerned that I had set the impression that founders should hoard their equity or that there were prescribed numbers to hand out.

Founder 251

Founder Cofounder Equity Stock Options 251

Both Sides of the Table

JUNE 22, 2011

But this mania to not miss out on the next big thing is driving some investors to pay growth-equity prices for traditional market risk (as in, they’re paying up before it is clear there is product / market fit). And well they should be. And so on down then line.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Both Sides of the Table

SEPTEMBER 29, 2009

This came in part due to the huge influx of money into VC but also because hedge funds and private equity shops with no VC experience wanted part of the action. High burn-rates fueled by over investment – One of the most damning things that happened to the start-up markets in 97-00 and 05-08 was the overfunding of technology companies.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

JUNE 12, 2013

Who cares what my equity is. The compensation at the time was much less than what others told me a general partner at a VC firm would get. My philosophy was simple. “I’ve never been a VC before. So they’re taking a bit of a risk on me. . If I do well, I’ll ask for more later. ” I did well.

Los Angeles 407

Los Angeles PR Networking Partner 407

Both Sides of the Table

DECEMBER 20, 2009

Trilegiant Corporation , (who is owned by Avis Budget Group (yes, that Avis & Budget), in turn owned by the private equity group Apollo Management ) does business as PrivacyGuard and has engaged in the most unethical of business practices I have come across in years. But I’m also sending this to a couple of class-action lawyers.

Direct Marketing 263

Direct Marketing Private Equity Sacramento Marketing 263