Both Sides of the Table

SEPTEMBER 25, 2010

When I first read Paul Graham’s blog post on “High Resolution&# Financing I read it as a treatise arguing that convertible notes are better than equity. He’s fine with equity provided it’s cheap to paper it legally. Photo credit: D. Blanchard/O’Reilly Media. When I’m in, I’m in.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

MAY 28, 2018

There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. Founder: “$8–10 million” VC: “What’s your current burn rate?” Founder: “$250k / month.” Founder: “Um. Why are you raising so much?” Let me check my plan.”

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

AUGUST 18, 2009

Yesterday I wrote a blog post ( here ) in which I urged people to not have too many founders. To be clear – it is not about being stingy with or hoarding equity – it is about having a prenuptial agreement. - What if the person performs OK, but not great and you need to hire above him? They agreed to all be co-founders.

Founder 251

Founder Cofounder Equity Stock Options 251

Both Sides of the Table

SEPTEMBER 17, 2011

. “We’re all equal co-founders and we don’t care about titles.&# I usually encourage people to think about titles like, “Founder & CTO&# or “Founder & VP Marketing.&#. I usually encourage people to think about titles like, “Founder & CTO&# or “Founder & VP Marketing.&#.

Operations 292

Operations CTO Hire Startup Early Stage 292

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

JULY 12, 2011

This week I sat down with Chris Dixon, co-founder / CEO of Hunch and Partner at Founder Collective in the most recent installment of This Week in Venture Capital. 2. Chris then discussed his time as founder and CEO of SiteAdvisor, his first venture-backed startup.

Technical Review 281

Technical Review Artificial Inteligence Cofounder API 281

Both Sides of the Table

MAY 27, 2013

But the thing I am most proud of about Rob is that he has taken a company with a uniquely talented founder & CTO – Nick Halstead – and managed to build a very tight working relationship with Nick where we drive world-class product development without having the usual founder / CEO conflicts. Always seek input.

Advisory Board 365

Advisory Board CTO Hire Fractional CTO Los Angeles 365

Both Sides of the Table

AUGUST 3, 2010

years ago and told me, “I just got offered the chance to buy this company because the founder doesn’t want to continue. 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.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

SEPTEMBER 29, 2013

” From the hyperbolic Jason Calacanis weighing in that “The petty VC’s did everything to deride [Naval, the co-founder of AngelList]” as though the industry was collectively s g its pants that AngelList was going to put us out of business. founder fighting. strategic direction. Photo Credit from StickerMule.

Syndicate 356

Syndicate Syndication Cofounder Early Stage 356

Both Sides of the Table

FEBRUARY 23, 2015

For some aspiring to be tech entrepreneurs, I often suggest a two-step process, as I argued in this post that “ The First Startup Founder You Need to Invest in Is You.” The narrative of this discussion is something like this: I meet a 35-40-year-old founder with two kids and mortgage. He still has the dream.

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

Both Sides of the Table

SEPTEMBER 10, 2021

They might be ideas they hatch internally (via a Foundry) or a founder who just left SpaceX and raises money to search for an idea. two founders in a garage?—?(HP The most connected and high-potential founders start with wads of cash. The legends of Silicon Valley?—?two HP Style) are dead.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

JUNE 30, 2011

Some startups won’t make the cut but those founders will have developed invaluable skills and will join the ranks of the survivors. Hedge funds and growth equity firms returning to their traditional segments of the market. The explosion in number of startups coupled with the decrease in numbers & dollars of VCs portends this.

Venture Capital 289

Venture Capital Early Stage Valuation Angel Investor 289

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. So money spent should add equity value or create IP that eventually will. it is also the title of a fabulous book from Internet 1.0

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Both Sides of the Table

MAY 19, 2010

Founded in November 2007 in New York City by Alexis Maybank and Kevin Ryan (co-founder of DoubleClick); CEO is Susan Lyne (ex-CEO Marta Stewart Living Omnimedia) Revenue estimates: $50mm in 2008; $170mm in 2009 (versus budget of $150mm); $450mm forecasted for 2010. Founded in October 2006 by Jonah Peretti (co-founder of Huffington Post).

Partner 240

Partner New York City Cofounder Syndicate 240

Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. I said that at the Founder Showcase, too. 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).

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

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

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

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

APRIL 6, 2014

Whether you’re considering hiring a new employee or as an investor whether you’re looking to do a background check on the founders of a company. I know that in later-stage growth equity deals some firms even hire third-parties who will do the reference calls. Reference calls. We all have to make them.

Technical Review 302

Technical Review Hiring Later Stage Employee 302

Both Sides of the Table

APRIL 19, 2011

I recently sat down with Matt Coffin , the founder of LowerMyBills, which sold for $400 million but was very nearly a bankruptcy only a few years early, and talked “startups.&#. Matt is one of the most transparent, focused & honest startup guys you’ll meet. Passion is infectious – people respond to it.

Acquisition 304

Acquisition Warrant Customer Term Sheet 304

Both Sides of the Table

SEPTEMBER 18, 2014

I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies. “But lawyers will charge much more for equity.” My colleague: Whoa.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

OCTOBER 17, 2019

It proved to be fortuitous because it allowed me the time & space I needed to get to know tons of founders and VCs and to hone my craft. Some Teams Create, Others Scale (Some do both) There is so much focus these days on founders and whether they should always remain in the CEO seat.

IP 223

IP Intellectual Property IRR Cofounder 223

Both Sides of the Table

SEPTEMBER 2, 2009

If a company has reached a level of success, has been around for a few years and you believe the company has potential to break out into a much bigger company then you should let the founders take money off of the table. Founders however are asked to take low salaries and never really get back the time they worked for free.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

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 28, 2010

Summit is a hugely respected firm in Silicon Valley and a long-term “institution&# but they’re better known as more of a “private equity&# investor meaning that they do later stage investments in much larger companies that are profitable. What I found strange about this funded was the fact that it was led by Summit Partners.

Venture Capital 270

Venture Capital Cofounder Spain San Diego 270

Both Sides of the Table

DECEMBER 17, 2012

I wonder sometimes if founders even know about the hours their lawyers or advisers put in on evenings, weekends, vacations. I had dinner with my friend Brooke Hammerling , founder of Brew PR recently. I would gladly part with equity (actually, I have) to work with people like her on deals. And it’s not just lawyers.

Startup 363

Startup PR Venture Capital Angel Investor 363

Both Sides of the Table

MAY 13, 2018

This is part of a series of advice for founders who need to raise money from venture capitalists. Somehow many first-time founders equate “sales” with something that is beneath them. I always tell founders … “An investors job is to deploy capital and make a return. This is where most founders err.

Term Sheet 332

Term Sheet Due Diligence Campaign Sales 332

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. I never thought of this until I became the Founder & CEO of my first startup company. 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 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. No doubt they spent countless hours arguing for reduced burn rates sometimes with founders, sometimes with investors.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

JANUARY 1, 2016

Most founders have a strong sense of what they’re trying to achieve. They hire their initial co-founders and early employees and everybody has a sense of “mission.” We tend to stick by founders in tough times and often roll up our sleeves in the darkest hours. You don’t have unlimited equity to dole out.

Leadership 150

Leadership Southern California San Diego Hiring 150

Both Sides of the Table

DECEMBER 1, 2009

I was reading one of my favorite websites for entrepreneurs, VentureHacks, this weekend and noticed that they are running a long piece on how to pick a co-founder. Once it’s set up I recommend bringing in a co-founder and giving them 10-30% of the company depending upon when you bring them in. For me 3+ is usually a non starter.

Hiring 289

Hiring Cofounder Dilution Startup 289

Both Sides of the Table

JUNE 5, 2015

” Today I want to talk about how a VC thinks about equity pricing on your round and particularly if you’re coming off of a convertible note. If you’re a solo founder and haven’t built out your team or engineers I’m likely to want 15+%. million and the founder starts thinking, “yeah, $3.5

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Both Sides of the Table

JULY 10, 2010

Michael is a very accomplished corporate executive in his own right having run Sega Gameworks and helped IPO EuroDisney as well as having been on the founding team of DreamWorks SKG (where he helped them raise their first $900 million in equity). million from Trinity Ventures, Founder Collective, Highline Ventures, NextNew Ventures.

IPO 242

IPO Venture Capital Private Placement Cofounder 242

Both Sides of the Table

MARCH 31, 2012

It is with this backdrop that I was really happy to learn from my friend Ethan Anderson (HBS alum & founder of RedBeacon) about an awesome program at HBS run by Tom Eisenmann called Launching Technology Ventures. Here is a sample of the reading list for the course that gives you a flavor for just how modern and practical this course is.

Startup 319

Startup Early Stage Sales Cofounder 319

Both Sides of the Table

MARCH 17, 2010

Side note: LA seems to have had some success in mega deals led by private equity firms as evidenced by DemandMedia and Chris DeWolf’s latest company backed by more than $20 million in private equity. You don’t have the founders of eBay, LinkedIn, Salesforce.com and Yahoo. You don’t. Get over it.

Silicon Valley 290

Silicon Valley Technology Los Angeles Southern California 290

Both Sides of the Table

OCTOBER 14, 2015

The truth is that the brutal reality of public markets is that they self correct much more quickly than our shitty little private equity illiquid corner of the universe. We have an entire generation of startup founders who don’t have muscle memory from getting their burn rates back into shape from 2008/09 or 2001-2005.

Burn Rate 150

Burn Rate San Francisco Private Equity LP 150

Both Sides of the Table

JULY 15, 2010

Convertible debt is a loan to the company that doesn’t typically get paid back but rather “converts&# into equity when you raise a larger round at a later date. We then had a full session with Rick Smith, founder of Crosscut Ventures (along with Brian Garrett).

Southern California 210

Southern California Venture Capital Seed Stage Angel Investor 210