Both Sides of the Table

MAY 13, 2018

If an investor isn’t engaging then they’re not suddenly going to get a term sheet. If we feel a mutual connection then my goal is to make your life easier by offering you a term sheet before you’re even raising and I’ll spend the time and effort trying to prove that it isn’t worth running a process. Plan accordingly.

Term Sheet 332

Term Sheet Due Diligence Campaign Sales 332

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … 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.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

MAY 21, 2018

He was in a later-stage financing round and was talking with many investors. I told him, “I know we don’t yet have a term sheet so you feel you need to listen to everybody’s request. But imagine you were expecting two term sheets imminently. How would you act then?

Term Sheet 217

Term Sheet Later Stage Demand Email 217

Both Sides of the Table

OCTOBER 7, 2014

5 million was always the classic definition of an A-round between the late nineties (crazy financings aside) and say 2007. Entrepreneurs started demanding that VCs call their first-round financings “seed” rounds even if they were $3 million. I saw this myself a few times in a row.

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. So how DOES a VC think about financings at early stages? It’s very simple. For me it’s clear.

Pre-Money Valuation 150

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

Both Sides of the Table

MARCH 17, 2012

The very first time I ever negotiated a term sheet (and then legal docs for closing the round) I found the experience very frustrating. He marks up the term sheet. Seems like the term sheet will be done in a day or so. And it obviously doesn’t just apply to a VC financing. Nor did their lawyer.

Term Sheet 301

Term Sheet Ireland Cofounder Finance 301

Both Sides of the Table

DECEMBER 14, 2010

They had received a term sheet from a VC and were wondering whether to work with this firm. But what about once you have a term sheet? They made great introductions, they helped you get financed, the put in more money themselves, they helped you strategically and they helped you with your exit.

Term Sheet 298

Term Sheet Venture Capital Stealth Cofounder 298

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. ” Getting a term sheet on the table is the second most sure way to get a potential acquirer to move faster.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Both Sides of the Table

MAY 10, 2018

What you don’t know is that MANY of these financings have been a months’ long series of no’s, compromises, hard terms, heartaches, arguments, self doubt, followed by a “yes” that saves the day. When you finally get a term sheet you get three. Fund raising seems so easy for everybody else and you’re doing something wrong.

Term Sheet 232

Term Sheet France Technical Review Restful 232

Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? I can’t say it much simpler than this: “What if I took some of the worst, most egregious terms in a standard term sheet and made them the defacto standard in most convertible debt deals? Let me explain it more clearly in equity terms.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

NOVEMBER 8, 2011

There were regular events where experts talked about: fund raising, term sheets, constructing a team, product development, establishing biz dev partners, M&A, dealing with the press, etc. GumGum – Raises $11 million financing. So What is Different for Class Three? This education will continue.

Los Angeles 287

Los Angeles Silicon Valley Incubator Startup 287

Both Sides of the Table

FEBRUARY 8, 2010

But what about once you have a term sheet? They made great introductions, they helped you get financed, the put in more money themselves, they helped you strategically and they helped you with your exit. As in real life – those that rush into marriage often find out what their partner is really like after the fact.

Venture Capital 288

Venture Capital Term Sheet Cofounder Partner 288

Both Sides of the Table

APRIL 23, 2017

It’s why raising a round of capital often feels like a hollow victory because it almost feels like a temporary reprieve from the Grim Reaper and in a way every new round just sets the bar higher to clear for the next round of financing or the hope of reaching profitability. You’re not done until you’re done. That’s fantasy land.

Burn Rate 238

Burn Rate Term Sheet CTO Hire Fractional CTO 238

Both Sides of the Table

FEBRUARY 11, 2012

submitting term sheets. Why should I pay 2x the price to hire a VP of sales as I would pay to hire a VP of Market, Technology or Finance? I learned concepts such as BATNA (Best alternative to a negotiated agreement, which every MBA will remember). We like to short-hand it, as in, “What’s our BATNA?”

Mexico 305

Mexico Term Sheet Hiring Search 305

Both Sides of the Table

AUGUST 1, 2010

They either do too many seed investments (for which they can spend no quality time with any) or they treat it as an option (“if you succeed come back and see us and we’ll match any term sheet you get&# ) – they view it as a sort of “right of first refusal.&#. The signaling affect is overrated.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

Both Sides of the Table

SEPTEMBER 8, 2012

But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. You simply draft up a series seed term sheet. Another easy way to do it is the term sheet create Series Seed A-1 and Series Seed A-2.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Both Sides of the Table

JANUARY 31, 2011

But we had a term sheet !!! One investor played chicken with me by threatening not to approve my next-round financing unless I gave him more equity. Google DID NOT just acquire our main biz dev partner. Google doesn’t know if they’re going to honor our contract? We now have to re-convince everybody?

Entrepreneur 384

Entrepreneur Startup Salary Egypt 384

Both Sides of the Table

JANUARY 22, 2011

But we had a term sheet !!! One investor played chicken with me by threatening not to approve my next-round financing unless I gave him more equity. Google DID NOT just acquire our main biz dev partner. Google doesn’t know if they’re going to honor our contract? We now have to re-convince everybody?

Entrepreneur 176

Entrepreneur Startup Salary Egypt 176

Both Sides of the Table

AUGUST 17, 2009

This is part of my ongoing series “ Pitching a VC “ There’s a great meme developing this morning on the need to simplify funding terms and documents. The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests.

Founder Vesting 252

Founder Vesting Vesting Founder Term Sheet 252

Both Sides of the Table

JANUARY 11, 2011

If they say yes you get a term sheet and once this is signed it is usually 3-6 weeks until your legal docs get signed and you’re funded. Progress to date of your company (when started, key milestones, what shape is the product in, any pilot / beta customers, financing). Who should attend the meeting? Competition.

Non-disclosure Agreement 340

Non-disclosure Agreement NDA Cofounder Term Sheet 340

Both Sides of the Table

JANUARY 16, 2012

These include building products, recruiting, managing your finances, marketing, selling, getting feedback from customers and … fund raising. If they see you when you’ve already got your first term sheet and they’ve got 3 weeks to decide then by definition they have no relationship with you.

Developer 366

Developer Silicon Valley PR Las Vegas 366

Both Sides of the Table

MARCH 30, 2016

Six firms had expressed strong interest, two had strong champions already trying to test price and round size and one had made it clear they were planning to submit a term sheet the following week. Great companies get financed. But of course public markets had begun gyrating.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Both Sides of the Table

FEBRUARY 14, 2016

When I was an entrepreneur there was no public information about how term sheets worked or how investors thought. Why Financing in Falling Markets is So Damn Difficult. That’s just because the VCs are constantly saying so and making this a fulfilling prophecy. All of these are false. And so it goes.

Valuation 150

Valuation Down Round Startup Later Stage 150