Feld Thoughts

JUNE 10, 2022

But if you can do a clean financing at a lower price, I always think that’s a better option for everyone (founders, employees, and existing investors.). and a bunch of other things. Sometimes, given your syndicate configuration, you have no choice but to take structure in a new round.

Down Round 162

Down Round Ratchet Liquidation Preference Participating Preferred 162

Both Sides of the Table

MAY 13, 2013

I’m supposed to believe that my best innovation can only come from scores of startup founders who just made millions and have now become CVOs at my company? Almost certainly the startup would have raised some capital. If you don’t know venture economics – there is an overview here.). Chief Vesting Officers)?

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

VC Cafe

OCTOBER 31, 2022

It’s a tough time for a lot of startup founders right now. This is not meant to be a negative post, but rather a temperature check of today’s market environment and the levers founders can pull on to survive this period. Venture-Capital Firms Buy Up Public Tech Stocks as Startup Market Stalls (Source: WSJ ).

Founder 174

Founder Technical Review Down Round Liquidation Preference 174

Both Sides of the Table

JULY 25, 2011

When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Or what “participating preferred&# stock is and how it can screw you. Drag along rights?

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

K9 Ventures

JUNE 5, 2015

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. Implications for Founders. Too many founders still think that. As it happens almost every few years there was a new normal developing.

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

Scott Edward Walker

JULY 7, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. What Are the Key Issues for Founders? There are several issues founders should focus on in connection with redemption rights.

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

Up and Running

AUGUST 17, 2015

Legal Aspects of Entrepreneurship: While the exact title and contents of this class may vary depending on the business school you attend, as a first time founder, it’s incredibly important to understand all of the legal considerations around starting your own company (e.g., It helps mitigate startup risk.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). If you don’t, please educate yourself on this site, Venture Hacks and the term sheet series by Brad Feld/Jason Mendelson, among other places. under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Altgate

DECEMBER 18, 2008

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Holiday Cards Year End Management Changes → The 3X Liquidation Preference Is Back! Let’s recap how expensive a 3x liquidation preference really is. Bookmark the permalink.

Liquidation Preference 31

Liquidation Preference Venture Capital Post-Money Valuation Participating Preferred 31

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.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Startup Professionals Musings

SEPTEMBER 26, 2015

Here is a summary of the key terms to expect on the term sheet, or the contract between the founder and investor: Consideration given for the money invested. Smart entrepreneurs will limit these seats to one or two top investors, to keep the board size manageable, as well as to balance control with startup founders.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

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. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 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

Both Sides of the Table

SEPTEMBER 2, 2009

If a company has reached a level of success, has been around for a few years and you believe the company has potential to break out into a much bigger company then you should let the founders take money off of the table. The VCs basically have liquidity in management fees along the way, in the sense they get paid decently along the way.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Growthink Blog

MAY 23, 2011

With this seed capital – more often than not totaling between $100,000 and $1,000,000 - the company accomplishes a number of key technical milestones, gets a beta customer or two, and then goes on a "road show" to venture capitalists around the country for capital to “scale” the business. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Feld Thoughts

SEPTEMBER 9, 2015

If private capital is no longer available in the future, these companies will seek a public offering or acquisition. We basically doubled the number of unicorns in the past year and a half,” says Aileen Lee, the founder of Cowboy Ventures, who has herself become a mythic creature in the Valley after coining the term.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

genylabs.typepad.com

SEPTEMBER 24, 2011

Even the best venture capital firms have a lot of failures and few successes. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. venture capital. However, Ive learned four lessons the hard way: 1. what your rights are.

Equity 40

Equity Technical Review San Jose Stock 40

Scott Edward Walker

APRIL 9, 2012

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. and (iii) what securities laws do founders need to worry about in connection with the issuance of convertible notes?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Scott Edward Walker

SEPTEMBER 14, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. What Are the Key Issues for Founders? Second, founders should only agree to pay the investors’ legal fees and expenses if the deal actually closes.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

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

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

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. It must be paid out before the common shares, which are typically held by the founders and other employees.” But this time he missed a few things.

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Both Sides of the Table

NOVEMBER 4, 2009

If you never raise another round of venture capital (a big if) and if your company is sold for the normal venture exit ($50 million on average for 200 or so annually that get sold) then what is your stake? BTW, this ignores liquidation preferences which actually mean you’ll earn less. Best to be a founder.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Professor VC

APRIL 1, 2010

I had a discussi on with another angel investor a few months ago and he was bragging about the deal he just struck that included a 3X participating liquidation preference. Labels: Angel Investors , fundraising , term sheets , venture capital , venture financing. The Most Important Venture Capital Statistic.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

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. As a bootstrapped startup, the only accountability you have is to yourself and to your co-founder if you have one. Having great accountability.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

ithacaVC

FEBRUARY 13, 2013

Negotiate a $20 million pre-money with a 19-year-old founder CEO. Somebody who’d bale a portfolio together with the soft strong bonds of liquidation preferences, who’d laugh and then sigh… and then respond with a soft-whisper “NFW”, when his portfolio CEO says he wants to spend his life “doing what a VC does”. So, God made a VC!

Liquidation Preference 55

Liquidation Preference IRR Due Diligence LP 55

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. 3) Investor/Founder Mindset Challenges.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

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. One of the highlights of my trip was a startup dinner which included Jason Fried and David Heinemeier Hansson, the founders of 37signals.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

thestartuplawyer.com

FEBRUARY 24, 2010

He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. You can start by examining every aspect of the co-founder relationship. In fact, if your co-founder is a friend or relative, that should trigger even more issues and discussions.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Pascal's View

DECEMBER 30, 2012

While every company founder makes trade-offs in building a company, few entrepreneurs appreciate the far-reaching implications of several critical decisions they will are required to make at the outset of a startup’s evolution. Most founders tend to make decisions with no process, based on their gut instincts.

Cofounder 34

Cofounder Liquidation Preference Vesting Equity 34

K9 Ventures

OCTOBER 19, 2015

Note: If you’re a founder, stop reading this post now. If you’re even remotely connected to the “industry” of Venture Capital, you need to read Howard Marks’ It’s Not Easy memo. If you build a good company, investors will hunt you down.

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

Altgate

DECEMBER 18, 2008

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← The 3X Liquidation Preference Is Back! Share and Enjoy: This entry was posted in Management , Startups and tagged board , CEO , founder , startup , succession. Bookmark the permalink.

Liquidation Preference 28

Liquidation Preference Management Venture Capital Founder 28

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' Startup outcomes tend to be very binary.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

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. What Are the Key Issues for Founders?

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159