Both Sides of the Table

MAY 13, 2013

Let’s assume $2 million in seed money. If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. It says if you want to make “real” money - quit. Get some famous angel or seed money.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

AUGUST 1, 2010

I think the issue was mostly framed initially by Chris Dixon in his article The Problem with Taking Seed Money from Big VC s. From the debate on VentureHacks, our offline chats and from our blog posts, I think that Chris Dixon and I are pretty much 98% aligned on the topic. We have a limited amount of deals we will do.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. The product gets a lot better.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70