Scott Edward Walker

JULY 20, 2011

This is particularly important where there will be an ongoing relationship post-closing, such as in a venture capital financing or private equity acquisition. You will need to work with the guys on the other side of the table post-closing, perhaps for a number of years.

Private Equity 78

Private Equity Liquidation Preference Option Pool Entrepreneur 78

Scott Edward Walker

JUNE 9, 2011

Introduction This post originally appeared as part of the “ Ask the Attorney ” column I am writing for VentureBeat ; it is another installment of my ongoing series regarding venture capital term sheets. These rights are related to the investor’s liquidation preference.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

The Equity Kicker

DECEMBER 30, 2013

Nassim Taleb is one of the most visionary thinkers in modern finance. Optionality is the property of asymmetric upside (preferably unlimited) with correspondingly limited downside (preferably tiny).” Venture capital, when practiced properly by a top tier firm, is a classic example of a business that benefits from optionality.

Finance 129

Finance Liquidation Preference Valuation Harvest 129

Life Beyond Code

SEPTEMBER 27, 2011

Through this journey, we have raised the visibility of fundamental issues like the causes of exorbitantly high infant entrepreneur mortality, and alerted the entrepreneur community with a simple observation: Entrepreneurship = (Customer + Revenue + Profits); Financing is Optional. on a global scale.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

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

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? 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. Last year ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. 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. What is a Convertible Note? price the round).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

K9 Ventures

JUNE 5, 2015

In that presentation, I said that Seed is not the first round of financing any more and that K9’s investments were mostly “pre-seed”. The Venture Capital industry as a whole does a terrible job of giving things the right name and so we end up keeping the same name, but changing the meaning out from under it.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Feld Thoughts

FEBRUARY 9, 2016

I watched, participated, and suffered through every type of creative financing as companies were struggling to raise capital in this time frame. I’ve seen every imaginable type of liquidation preference structure, pay-to-play dynamic, preferred return, ratchet, share/option bonus, option repricing, and carveout.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Up and Running

AUGUST 17, 2015

Additionally, I had already studied Economics and Finance during undergrad, making the academic part of an MBA seem a little redundant. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). Is business school really necessary?

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Tim Keane

JANUARY 12, 2010

  I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] Second a liquidation preference and a participation.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

genylabs.typepad.com

SEPTEMBER 24, 2011

Even the best venture capital firms have a lot of failures and few successes. 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. where your stock sits in the liquidity preference stack.

Equity 40

Equity Technical Review San Jose Stock 40

Growthink Blog

MAY 23, 2011

The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. This venture capital financing - usually between $3 and $10 million - is the first of a number of rounds of outside investment over a period of three to five years. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Professor VC

APRIL 1, 2010

One comment made by Jason was that angels tend to be less sensitive than VCs on valuation and can potentially make it difficult to get a venture financing done at acceptable valuation. Labels: Angel Investors , fundraising , term sheets , venture capital , venture financing. Steve Bennet. at 11:15 AM.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

The Equity Kicker

MARCH 3, 2016

All of the deals had a liquidation preference of 1x or more. I think a bigger part of the explanation lies in deal dynamics – it’s easier for companies maximise valuation in private financing auctions than it is in IPOs. However, few of the deals went beyond a simple 1x non-participating preference share.

Liquidation Preference 60

Liquidation Preference Participating Preferred Valuation IPO 60

Austin Startup

APRIL 1, 2017

out of state VCs Don’t rush a term sheet In assessing financing terms and interacting with their lead investors, most founders instinctively focus on two core things: economics and control. Background Reading: How to avoid “captive” company counsel Local v. And, broadly speaking, that is correct.

Term Sheet 48

Term Sheet Institutional Investors Technical Review Lead Investor 48

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

The Startup Lawyer

JUNE 9, 2010

A startup’s Series A financing shouldn’t be a large liquidity event or salary payday for the startup’s founders. The startup community focuses most of the term sheet discussion on liquidation preferences and anti-dilution , but startup CEO salary is nonetheless an important issue. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

ithacaVC

MAY 1, 2013

I read an article this morning in DealBook titled “ In Venture Capital Deals, Not Every Founder Will be a Zuckerberg “ Go ahead and give it a read. The article also states that “But venture capital investments are structured to ensure that the venture capitalists are paid before founders and employees.”

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Altgate

DECEMBER 16, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← More on Liquidation Preferences Happy Holidays → Where Do Tech VCs Invest? The data set is about 1,200 rounds of financing for US tech companies that completed the 2010 CompStudy survey.

Liquidation Preference 59

Liquidation Preference Early Stage Venture Capital Later Stage 59

ithacaVC

FEBRUARY 23, 2011

The MCOP can serve a critical role as founders and other management team members are diluted down by rounds of financing or if their equity is not in the money. As the investors’ aggregate liquidation preference (ALP) increases typically the need for a MCOP also increases. A few key points to consider: 1.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

Spencer Fry

APRIL 17, 2017

Having started and sold 3 successful bootstrapped businesses, and am now running 1 venture capital backed business ( Coach ), this is a topic I know a thing or two about. You can also getaway with giving up zero-to-little equity if you finance the business out of your own pocket or through other means, such as consulting.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Feld Thoughts

JULY 14, 2015

Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. A company raises $1m of seed money from angels in a convertible note with a $6m cap. The company spends the $1m building and launching their first product.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

SoCal CTO

JULY 13, 2010

10 Ways To Be Your Own Boss - A VC : Venture Capital and Technology , June 18, 2010 The folks at Behance and Cool Hunting asked me to talk at their 99% Conference a couple months ago. liquidation preference. Will you negotiate million dollars rounds of financing with cool VCs? Yes, even bootstrappers. Productivity.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

abovethecrowd.com

MAY 20, 2013

Private companies typically have capitalization structures that are very complex. There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. The only way around this is to reverse your way of thinking.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

Professor VC

JULY 25, 2013

Mike Markkula presenting Steve Jobs with first investment in Apple I recently watched an excellent documentary on PBS, Something Ventured: Risk, Reward, and the Original Venture Capitalists. Angel Investors Silicon Valley term sheets venture financing venture capital'

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

abovethecrowd.com

FEBRUARY 24, 2015

Historically, different financial institutions specialized in different stages, because the assessment of risk and opportunity was considered unique at each stage — for example, a seed investor was unlikely to do late-stage financing, and vice versa. These liquidation preferences give the investor a debt-like downside protection.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

thestartuplawyer.com

FEBRUARY 24, 2010

About the Author Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. He obviously never launched a startup and got shafted by a co-founder. Click here to learn more about his practice.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.”

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

dondodge.typepad.com

JANUARY 15, 2011

It isnt always possible to have a competitive bidding situation at each financing round so here are some guidelines for funding sources and percentages. Friends & Family can usually raise between $30K and $300K and usually take an interest bearing note that is convertible into stock at the next financing. 5% Managers -.25%

Equity 40

Equity Employee Dilution Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

Put simply, it’s really hard to build a strong company when all of your competitors are giving away free s**t fueled by venture capital chasing winner-take-all returns. Why Financing in Falling Markets is So Damn Difficult. And so it goes. Back to my non-VC example. Plus, down rounds trigger anti-dilution provisions.

Valuation 150

Valuation Down Round Startup Later Stage 150