Gust

APRIL 11, 2014

If you read the “ Dilution ” section of an IPO prospectus , you’ll see that the opposite happens to investors in the new public shares. That is not economic dilution, but rather its opposite ( accretion ).

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Gust

MAY 18, 2015

While IPOs are possible, they are very rare for angel-funded companies. Three outcomes dominate exits of angel-funded companies: Dead bugs – Startups that go out of business, returning less-than-invested capital to angels (usually zero). The exits can range from simply return of Read more >.

Capital Gains 70

Capital Gains IPO Sales Startup 70

Gust

MAY 18, 2015

While IPOs are possible, they are very rare for angel-funded companies. Three outcomes dominate exits of angel-funded companies: Dead bugs – Startups that go out of business, returning less-than-invested capital to angels (usually zero). The exits can range from simply return of Read more >.

Capital Gains 70

Capital Gains IPO Sales Startup 70

Gust

NOVEMBER 23, 2011

The law would have the effect of allowing companies to stay private longer, deferring the significant expense, management distraction and public disclosure of financial and operating data involved in the IPO process. All opinions expressed are those of the author, and do not necessarily represent those of Gust.

IPO 110

IPO Prospectus SEC Intellectual Property 110

Gust

SEPTEMBER 6, 2014

If the VC fund took the typical 20% interest, that sets the IPO value of the company around $160 billion, or roughly eight times the value at which Google went public. NB: The math is very rough, and is estimated off the top of my head, but is intended primarily to illustrate to underlying challenge of very long term, risky investments.

Exit Strategy 116

Exit Strategy Seed Stage Early Stage Carried Interest 116

Gust

FEBRUARY 1, 2014

Although most novice angels (and, to be fair, many experienced ones as well) expect that they will write one check up-front, and then sit back until the IPO, in the large majority of cases the Real World™ intervenes, and additional funding is required.

Angel Investor 148

Angel Investor Startup IPO Early Stage 148

Gust

AUGUST 10, 2014

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. Thats why investors want to hear about your exit strategy. If you dont have one, or intend to buy out investors with their own money, you probably wont get much interest.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

Gust

OCTOBER 17, 2012

A little less than one-third of IPOs are of venture capital-backed firms. While this is really impressive given that VCs invest in less than 1 percent of new ventures, it still means that two out of every three IPOs are of companies that never had any venture capital investors.

Angel Investor 152

Angel Investor Venture Capital Seed Stage Silicon Valley 152

Gust

AUGUST 19, 2012

What is the planned exit strategy (IPO, merger, sale, including likely candidates)? What equity is the company willing to give in return for the investment? Show a breakdown of the intended uses of these funds. Exit strategy. What is the timeframe of return on investment? What is the timeframe for the exit?

Elevator Pitch 146

Elevator Pitch Exit Strategy Burn Rate Merger 146

Gust

NOVEMBER 22, 2011

At this stage, you need investment bankers to negotiate a merger or acquisition (M&A), go private, or help you go public with an Initial Public Offering (IPO). This is the final stage of investment in venture opportunities, and is the point where investors expect to see the return and gain from the original investment.

Venture Capital 171

Venture Capital Investment Bankers Angel Investor Initial Public Offering 171

Gust

DECEMBER 28, 2011

He writes: I find it amusing when a journalist writes an article about a prominent startup (either privately held or preparing for an IPO) and decries that, ‘They’re not even profitable!’ on his Both Sides of the Table blog.

Angel Investor 79

Angel Investor IPO Search Web 79

Gust

AUGUST 5, 2012

Going public” (IPO) is another alternative, but not common. For a family business, don’t project an exit. Otherwise, identify your preferred exit strategy, including specific candidates for merger or sale, and timeframe. Show how your rate of return would be attractive to investors.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Gust

OCTOBER 31, 2011

Moreover, don’t be fooled by the market cap on IPO date, which might still exceed six billion: that number has nothing to do with cash that the existing shareholders get (in fact, as it now stands, they’ll get nothing then, and have to wait a year before they do.

IPO 70

IPO Valuation Stock Partner 70

Gust

JULY 18, 2012

That’s well beyond the scope of this article (unless your startup is planning an IPO in the next few weeks), but the extra bells and whistles don’t change the fundamental governance structure. OK, if you’re still awake at this point, set all of that aside as we return to startup land.

Stock Options 188

Stock Options SEC Stock Government 188

Gust

SEPTEMBER 5, 2012

Angel investors don’t expect to get repaid, nor do they really want to get repaid; the return on their investment, if the startup proves a success, will come in conversion to equity followed by an eventual liquidity event (sale or IPO of the company), with a return of at least 5x or 10x the initial investment if all goes well.

Finance 134

Finance Convertible Security Equity Seed Stage 134

Gust

SEPTEMBER 17, 2014

Maybe an IPO – who knows? Lawyers don’t make money on your seed round in any instance. They are investing in your relationship in hopes that you do an A, B and C round. A few M&A transactions. Employment. Stock Option plans. Well … the reason I want to do notes is so I can do multiple closings. Try doing THAT with equity.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

JANUARY 5, 2012

Since the IPO market has been in the doldrums for most of the past decade, high-profile private companies have chosen (or been forced) to stay private while raising huge sums of money from VCs and other private equity sources.

SEC 131

SEC Angel Groups Technical Review Private Equity 131

Gust

OCTOBER 2, 2014

Tamp down the enthusiasm your naive family has about your “impending IPO” (honey, when can we buy shares? Tell the press how great you are and hope that they aren’t publishing your obituary 9 months later rendering you a fool. Uncle Morty wants to know) from “your successful daughter” (we’re so proud of her! she’s so successful!

Monaco 122

Monaco Cofounder Chicago Mexico 122

Gust

NOVEMBER 4, 2011

Redpoint was understandably disappointed that it didn’t get the chance to see its MySpace investment through to an IPO or later liquidity event at a higher multiple. To be sure, exiting at a 4X valuation in less than a year is not a bad investment, but it’s also not the type of exit that angels, VCs and founders usually have in mind.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Gust

DECEMBER 12, 2011

They are mentioned in any print, website, or television content concerning beauty, startups, New York, great entrepreneurs, women leaders , or the next generation of IPOs. Without a doubt, Birchbox is one of the hottest startups on the planet right now. So, its almost impossible to avoid them.

IPO 70

IPO Social Network Revenue Aggregator 70