Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Venture, private equity and more: Here we lump a large number of investor classes into one.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Startup Professionals Musings

DECEMBER 14, 2014

You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Every founding member wants to be compensated richly for the risk and the unknown.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Gust

JUNE 7, 2014

Every investment round in a company is made on the basis of extensivepaperwork (often upwards of 100 pages in total) specifying *precisely* what happens when it comes time to pay out the proceeds (if any) from the sale or dissolution of the company. Management carve-out (if any). Management carve-out (if any).

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Startup Professionals Musings

AUGUST 19, 2017

You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Every founding member wants to be compensated richly for the risk and the unknown.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. So co-management is the second group to share in the bounty upon a liquidity event.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Startup Professionals Musings

JULY 19, 2013

You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Every founding member wants to be compensated richly for the risk and the unknown.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Promissory notes come before any equity, and most late equity investments come before early equity investments, even of the same class of security.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Startup Professionals Musings

MAY 18, 2015

Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. Make sure the government waits for a stock sale to collect taxes. Limit board seats and manage member selection criteria. At that time the original split makes all the difference.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

The Next Web

MARCH 2, 2014

For many business owners and management teams, “now” can easily seem like the right time to secure funding, and why not? Of course, it would be ideal to retain the autonomy as long as possible to establish you and your management teams’ business vision, but some businesses absolutely require outside capital in order to scale.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). composed of these investors and management. For you who fit that description, nice work.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Berkonomics

OCTOBER 29, 2015

Taking money from professional investors such as angels or VCs usually requires that you agree to seek an exit for those investors in your plan, often targeting five to seven years as the ideal period for growth before a liquidity event. For some, that comfort is worth forgoing building high equity value.

Liquidity Event 48

Liquidity Event Equity Venture Capital Stock 48

Berkonomics

FEBRUARY 23, 2023

Young companies have been known to outgrow the abilities of management to focus and direct them, failing to make the transition to organized, stable growth. So, the question: load up with more equity and dilution? Growth brings financial issues. Or sell now?

Dilution 62

Dilution Valuation Early Stage Equity 62

Berkonomics

JUNE 2, 2010

I discovered the power of employee feelings of ownership early in my management career, establishing an employee stock ownership plan (ESOP), once popular as incentive compensation as well as a tax write-off for corporations and even a way to slowly transfer ownership of a company from the founders to the employees.

Liquidity Event 86

Liquidity Event Stock Options IPO Stock 86

Startup Professionals Musings

AUGUST 29, 2018

In fact, there are many types of crowdfunding, including donations, reward, pre-orders, loans, and equity. Professional investors, and more serious entrepreneurs, are most interested in money for ownership of a portion of the business (equity), and equity crowdfunding is still a small portion of the total (less than 10 percent), but growing.

Equity 180

Equity Due Diligence Angel Groups Liquidity Event 180

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Growthink Blog

MAY 13, 2012

But, when one of these factors are "out of whack," it can be a much tougher sale to make. And they'll want to invest if they believe your company has great potential to achieve a liquidity event, and one that enables them to earn a significant return on their investment. Getting funding from angel investors is the same way.

Angel Investor 93

Angel Investor Exit Strategy Liquidity Event Angel Groups 93

The Next Web

SEPTEMBER 29, 2013

Howard Marks is a serial entrepreneur and Managing Director of LA tech accelerator StartEngine. You’re basically tinkering with everything at this stage – product, marketing, sales, partnerships, etc. You’re tinkering with your marketing and sales channels. Raising money and spending it wisely are two different games.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Hearpreneur

OCTOBER 29, 2017

I loved what I did (sales) but I didn’t love doing it for somebody else. By screening hundreds of SMB acquisition opportunities as managing partner at my private equity firm, I saw first-hand that the vast majority of small business owners run their firms without the benefit of good financial or operating metrics.

Entrepreneur 90

Entrepreneur Social Media Liquidity Event Private Equity 90

Berkonomics

AUGUST 27, 2015

Many thought that they were starting companies for their children and grandchildren to inherit and manage. The businesses frequently were the owner-manager’s only major asset. The Flipper’s executives usually have significant equity holdings, either actually owned or reflected in stock options.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Often private equity investors will want control of the business as well.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Hunter Walker

SEPTEMBER 29, 2022

Starting a venture capital blog post with 1970s country music lyrics is pretty uncommon, but so is writing about when and why an investor might choose to sell equity before the company exits. Below I’ll share some of the principles we use at Homebrew , knowing that there’s not really a single ‘right’ answer for a fund manager.

Venture Capital 126

Venture Capital Cap Table LP Equity 126

abovethecrowd.com

APRIL 20, 2016

These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. We have already seen examples of founders and management obtaining liquidity in front of investors. Late 2015 also brought the arrival of “mutual fund markdowns.” Now you make your own decisions. ” Go public.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.quora.com

JANUARY 16, 2011

Someone who is egotistical enough to call themselves a rockstar, yet humble enough not to want 99% of the equity? The code behind airline reservations, visa transactions, and warehouse management systems, really did change the world beyond all recognition. Just go to a meetup or post an ad promising equity. Obviously not.

Developer 42

Developer Technical Review Cofounder Technical Cofounder 42

www.vccafe.com

MARCH 11, 2013

Task Management. Project Management Tools. Subscription Payments / Management. Managing APIs. Customer Relationship Management. Contractor Management. Private beta invitations & management: Prefinery. Scanning / Document Management. Project Management tools. Part 4- Closing.

Software Review 53

Software Review Technical Review Startup 53