Both Sides of the Table

DECEMBER 11, 2022

Something happened in the past 7 years in the startup and venture capital world that I hadn’t experienced since the late 90’s — we all began praying to the God of Valuation. And then in the late 90’s money crept in, swept in to town by public markets, instant wealth and an absurd sky-rocketing of valuations based on no reasonable metrics.

Valuation 466

Valuation San Francisco Ratchet Liquidation Preference 466

The Equity Kicker

AUGUST 1, 2012

This analysis assumes there was no participating liquidation preference and lumps together companies that have raised money with those that haven’t, but I think it is fair to guess that in aggregate the investors in these companies didn’t get what they set out for. Lightbox and Karma had raised money $5.7m

San Francisco 110

San Francisco Hiring Liquidation Preference Aggregator 110

K9 Ventures

JUNE 5, 2015

Low supply of companies with traction drove the valuations and deal sizes up. In addition, the competition for and the cost of hiring people, especially in the San Francisco Bay Area, has gone up dramatically. Valuations are rising to match. The risk here is what I refer to as the curse of over-capitalization.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

VC Cafe

OCTOBER 31, 2022

But even in the seed market the bar could get higher: I wouldn’t be surprised to see valuations drop and for VCs to have rising expectations about the level of traction they expect to see before funding. Two weeks ago in San Francisco, a conversation with tech lawyers from the US and Europe was a confirmation of what I read in the news.

Founder 173

Founder Technical Review Down Round Liquidation Preference 173

Scott Edward Walker

APRIL 22, 2012

This part 2 will address the economics of a convertible note seed financing and the three key economic terms: (i) the conversion discount, (ii) the conversion valuation cap and (iii) the interest rate. What is a Conversion Valuation Cap? and (iii) what are the advantages of issuing convertible notes?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

Scott Edward Walker

JULY 7, 2011

A redemption right is another feature of preferred stock and permits the investors to require the company to repurchase their shares after a specified period of time; it is, in effect, a “put” right – that is, the investors may elect to put their shares back to the company. This is a non-starter. Conclusion I hope the foregoing is helpful.

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

Scott Edward Walker

SEPTEMBER 14, 2011

If you have any questions, please feel free to call me directly at 310-288-6667 (Los Angeles) or 415-979-9998 (San Francisco). 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. Many thanks, Scott.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76