Genuine VC

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Early Seed Financing Terms Endure… Whether We Like It or Not

Genuine VC

Dharmesh Shah had a great post up last week about the lessons learned from raising a mezzanine round of financing. But the more meaningful reason that early financing terms endure into future rounds is that negotiation away from terms already in place are just that – negotiation. In contrast, valuation always has room to move up.

Finance 128
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Seed Stage Firms are Dead, Long Live Micro VCs

Genuine VC

The difference now is that given the structural changes in the market, seed-stage investors are more likely to be rewarded in valuation given the value which is created during this segment of the company’s life cycle. During an initial seed round, companies are able to test and validate live product/market theses.

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Seed Round Signaling Revisited: Myths, Truths, & Half-Lies

Genuine VC

The other is valuation of the next round of Series A financing. As soon as the “insider” VC realizes that the company has crossed the threshold for a Series A financing, s/he’ll understandably push for the round to happen sooner rather than later and lead it. Ability” to raise a subsequent Series A is only half the story.

Syndicate 166
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Signaling Pricing Expectations Early in Seed Investment Discussions

Genuine VC

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136
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Super Pro-Rata Rights Aren't Super

Genuine VC

I recently received a email from an entrepreneur who I know with a genuine question about terms of his financing: " How do you guys at NextView feel about one of our investors holding super pro - rata rights for the next round?" This scenario presents a number of troubling incentives.

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The VC Fundraising Timing Paradox

Genuine VC

The idea is that a couple of highly-qualified VC conversations will follow the 80/20 rule of a “good enough” financing in a relatively short amount period without taking the time of an extended process to truly optimize the funding outcome.

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Driving to Conviction (Not to a Term Sheet)

Genuine VC

A meeting of the minds about the key components of an agreement (structure, valuation, key features). In those cases, the propensity for time to kill all deals for this round and starting the race for the next round of financing can start behind the starting blocks with the VC firm of current investors not completely bought in.