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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

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.” Suppose the notes converted as if the acquisition were an eligible financing round. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Gust

SEPTEMBER 5, 2012

How to finance a new seed-stage startup? ” Ressi in particular seems to be passionate about removing the “debt” component from convertible debt seed financing transactions. .” I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For

Finance 134

Finance Convertible Security Equity Seed Stage 134

David Teten

MARCH 14, 2018

Another example is Correlation Ventures ($300M+ AUM), a VC firm which co-invests in financings with at least one other new outside VC. VC is a “get rich slow” business, because most VC Partners will not see a carry check for 5-10 years, after waiting for both liquidity events and for LPs to be paid first.

Private Equity 60

Private Equity Venture Capital Equity Cofounder 60

Startup Professionals Musings

AUGUST 29, 2018

According to Yahoo Finance , less than a third of crowdfunding campaigns currently reach their goals, and the rest have to return anything they do collect. Payoff after a liquidity event is difficult and unpredictable. That exceeds the amounts contributed in the U.S. by either angel groups or VCs alone.

Equity 180

Equity Due Diligence Angel Groups Liquidity Event 180

Steve Blank

JUNE 23, 2016

Second, the leaders of these companies tended to be those who excelled at finance, supply chain or production. But starting in the last quarter of that century and accelerating in this one, a new form of financing – risk capital (angel and venture capital) — emerged. They knew how to execute the current business model.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Berkonomics

APRIL 20, 2023

years before a liquidity event (positive or negative.) Angel investors will always finance many of them. How about the early-stage investors? You might be interested in this data as viewed from the early-stage investor’s viewpoint. Angel investors hold their average investment for 4.5 first appeared on BERKONOMICS.

SBA 62

SBA Angel Investor Early Stage Liquidity Event 62

Women Entrepreneurs Can

NOVEMBER 19, 2022

These firms can provide various services, including financing and business advice. Investors receive a healthy return on investment when the company reaches a liquidity event. However, this also carries the possibility of a high return on investment. They can also help you develop your product and sales channels.

Venture Capital 52

Venture Capital Early Stage Liquidity Event SEC 52

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). These are all rare, but real, and fortunately not anything we’ve dealt with in our firm.

Venture Capital 122

Venture Capital Cap Table LP Equity 122

Berkonomics

FEBRUARY 20, 2020

And the process of borrowing money or financing asset purchases can be an eye-opener for those who are not used to today’s lender and seller aversion to grant easy credit. A win-win for the investor and entrepreneur assuming the company does grow and have a liquidity event someday.

Warrant 62

Warrant Liquidity Event Stock Finance 62

Gust

JUNE 7, 2014

The technical term for this is the “liquidation waterfall”, because on a liquidation event (whether good, as in a large buyout, or bad, as in a distress sale, investors (and others) get paid out in a specified order. So, here is the typical payout order, from first to last: 1) Salaries owed to employees.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Steve Blank

JULY 15, 2010

Number of Venture Backed Liquidity Events 1991-2000. Number of Venture Backed Liquidity Events 2000-2010. They’ve created virtual IPO’s for founders and employees via late-stage private financing. During the decade between 1991 and 2000, nearly 2000 venture backed companies went public. Source: NVCA.).

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Berkonomics

JUNE 15, 2017

So be aware that professional investors are in your company for the eventual large profits at the liquidity event. They are your friends only as long as you meet or exceed planned growth and value.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Hunter Walker

MARCH 8, 2014

If you’re graduating this spring and starting a career in tech, I’ve got one piece of advice: go work at a midstage startup (I’ll define that as B/C rounds of financing – eg Twilio, Stripe, Airbnb, Warby). Here’s why: 1.

Liquidity Event 134

Liquidity Event Early Stage Seed Stage Startup 134

View from Seed

MAY 19, 2015

Even if VC financing has been raised, extravagant and wasteful spending by a few founders or company leadership sets the tone for the entire organization. Without a full corporate infrastructure of support, and more importantly, without extensive monetary resources, founders and employees must spend wisely.

Seed Stage 120

Seed Stage Liquidity Event Cofounder Startup 120

Up and Running

SEPTEMBER 19, 2017

Private equity investments are an important part of many startup business’s plans for accelerating growth or providing founders with a liquidity event. That’s because at those levels the business is so small that the likelihood of needing to engage in contractually unanticipated strategic business activities is extremely high.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

YoungUpstarts

MARCH 11, 2015

For example, a valuation is usually needed for tax purposes when a) the company issues stock options for the first time; b) the company has a “material change” in their business such as a new financing; or c) it’s been more than 12 months since the last valuation. Professionalisms business finance business valuation Janet Chase'

Valuation 100

Valuation Stock Options CPA Merger 100

Berkonomics

MARCH 9, 2017

years before a liquidity event (positive or negative.) Angel investors will always finance many of them. You might be interested in this data as viewed from the early stage investor’s viewpoint. Again, quoting the ARI study, angel investors hold their average investment for 4.5 Entrepreneurs will always start new enterprises.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

Hunter Walker

AUGUST 24, 2014

Did I work any less hard the next day because of my liquidity event? It’s for reasons like these that I support getting startup founders some liquidity during their company’s first few years, perhaps as early as Series A financing when appropriate.

Founder 108

Founder San Francisco Liquidity Event LP 108

The Next Web

MARCH 2, 2014

Instead, honestly analyze the company’s business plan and finances to determine whether the business needs to secure outside funding in order to achieve its objectives, and if so, how much. Should we finance with debt or equity? Here are four main questions to keep in mind during the vetting process: 1. Take your time.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

Berkonomics

FEBRUARY 28, 2019

A win-win for the investor and entrepreneur assuming the company does grow and have a liquidity event someday. And the process of borrowing money or financing asset purchases can be an eye-opener for those who are not used to today’s lender and seller aversion to grant easy credit.

Warrant 48

Warrant Liquidity Event Dilution Cofounder 48

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. Closing : Is there a specific date that the convertible debt financing will close, or will there be an open round of seed investment ? 2X/3X, etc.)

Term Sheet 62

Term Sheet Pre-Money Valuation Liquidity Event Warrant 62

Berkonomics

NOVEMBER 1, 2018

Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale. Formal option plans for some.

Stock Options 192

Stock Options Stock Distribution Programming 192

Early Growth Financial Services

JULY 10, 2014

Too often, entrepreneurs neglect planning for and managing personal finances as they focus on building their business, lining up financing, and steering toward an eventual liquidity event. One thing that’s probably not occupying much mind space as you’re building your company is managing your personal assets.

Liquidity Event 41

Liquidity Event Management Stock Options Founder 41

Pascal's View

AUGUST 28, 2010

billion, followed by finance, 19 deals, and healthcare, 17 deals. The biggest industry waiting is computers and electronics with 23 deals seeking to raise as much as $4.8 Private-equity and venture capital firms have been hard hit too.

Venture Capital 56

Venture Capital America Initial Public Offering IPO 56

Hunter Walker

NOVEMBER 20, 2013

3) The Alternate Liquidity Syndicate. Smaller liquidity events can still be valuable to a fund (very dependent upon size, stage and ownership percentage), but if you’re in the venture business, you’re playing into some variation of the ‘swing for the fences’ mentality.

Syndicate 98

Syndicate Syndication South America Seed Stage 98

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) was spun out, and the valuation was set by that financing round.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Up and Running

SEPTEMBER 20, 2021

A convertible note is like a loan, but this amount can be converted into company equity later on, usually during a liquidation event, like the acquisition of the company. The popularity of convertible notes is increasing in the world of startup financing, especially in seed-stage companies. Convertible notes.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

SEPTEMBER 27, 2010

What micro VCs need to consider is what happens when several of your companies want to grow and require VC financing? Or when the economy turns downward and they all need financing extensions? The hardest thing is deciding what the right time to allow founder liquidity is. It is such a disconnect.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. By the first quarter of 2016, the late-stage financing market had changed materially. Investors were becoming nervous and were no longer willing to underwrite new Unicorn-level financings at the drop of a hat. This is uncharted territory.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

David Teten

AUGUST 21, 2019

Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. But you also can’t run the company forever, since investors need a liquidity event. Most founders who are raising capital look first to traditional equity VCs. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

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. While a startup typically receives millions of dollars in a Series A, if too much of that $$$ flows guaranteed to the founders, various incentives get out of whack. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

Growthink Blog

JANUARY 13, 2013

Enacting a liquidity event. Suggested Resource: In Venture Capital Pitch Formula , you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentations, and how to secure your financing. Here's how VCs earn returns for their investors: 1. Finding high growth companies 2.

Venture Capital 92

Venture Capital Angel Investor Liquidity Event Term Sheet 92

ithacaVC

DECEMBER 14, 2011

Yes, it is possible to issue preferred stock without liquidation preference, but that is rarely done. Rather, preferred stock has the right upon a liquidation event to get its money back (a 1X LP) or, sometimes, a multiple of its money back (for example a 2X LP). Ok, enough of the background. million balance. ($3

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Growthink Blog

SEPTEMBER 9, 2011

VCs earn returns for their investors by finding high growth companies, making investments in them at favorable terms, guiding and nurturing them, and enacting a liquidity event (e.g., By providing a solid ROI to their investors, VCs earn bonuses and raise more funds so they can stay in business. This video explains more. read more.

Venture Capital 114

Venture Capital Liquidity Event Initial Public Offering Term Sheet 114

www.vccafe.com

MARCH 11, 2013

Event platforms. easy business finance software. YCombinator Series AA Equity Financing Documents. Y Combinator : They provide a series of AA equity financing documents that are written with simpler words so start-up companies will have an easier starting point. Startup Threads. Videos/presentations. SlideShare.

Software Review 53

Software Review Technical Review Startup 53