The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. Here are terms that are typically found in a convertible note term sheet: Amount of the Offering : How much capital can the startup raise via the convertible debt offering?

Term Sheet 62

Term Sheet Pre-Money Valuation Liquidity Event Warrant 62

Both Sides of the Table

JUNE 5, 2015

Over the years I’ve written extensively about the downsides of convertible notes for startups such as here , here and here. In the old days VCs funded off of a “pre-money” valuation. Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Gust

SEPTEMBER 27, 2014

We have spent a great deal of effort to pull together some of the smartest experts in the money-raising field, and the blog is carefully curated to be useful specifically to entrepreneurs seeking funding. Starting to raise money without understanding the world into which you are stepping is the quickest route to frustration.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

ithacaVC

JANUARY 14, 2014

I was giving some advice the other day on how to approach Series B investors in terms of valuation. Company X raised its Series A at a pre-money valuation of $5mm and it raised $4mm dollars. So the post-money valuation after the Series A was $9mm. Dealing with VCs Management Startup Life'

Pre-Money Valuation 58

Pre-Money Valuation Post-Money Valuation Valuation Term Sheet 58

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. I’ll continue with more specific terms and wrap up next week with some thoughts about recent changes and trends for the future. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Both Sides of the Table

SEPTEMBER 5, 2012

Some thoughts on raising angel money. I can’t say it much simpler than this: “What if I took some of the worst, most egregious terms in a standard term sheet and made them the defacto standard in most convertible debt deals? Let me explain it more clearly in equity terms. That’s right.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

ithacaVC

APRIL 25, 2012

If you want to scare off VCs, start your pitch with “we are looking to raise $X at a pre-money valuation of $Y” Stating how much you want to raise is fine and recommended. However, stating a desired pre-money valuation early in the process is not a good idea. Here is why.

Valuation 49

Valuation Pre-Money Valuation Liquidation Preference Preferred Stock 49

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. How to pump up your VC valuation. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

ithacaVC

APRIL 10, 2012

To put it bluntly, why should a founder, who knows that he/she will have little salary when they start their startup accrue the “lost” salary on the company’s books? It is part of the startup routine, prior to fund raising, to bootstrap and be super frugal. To me this makes perfect sense and is justified.

Cap Table 49

Cap Table Pre-Money Valuation Stock Options Due Diligence 49

The Startup Lawyer

AUGUST 12, 2010

Occassionally, a startup will get a term sheet from an angel with a pre-money valuation less than the investment amount (i.e., the angel wants control of the startup). Tags: Startup Issues Angel Investors startup. Investor fear is workable, but corporate narcissism is a deal breaker.

Pre-Money Valuation 76

Pre-Money Valuation Angel Investor Term Sheet Valuation 76

Both Sides of the Table

FEBRUARY 25, 2010

When I was raising money for my first company we had closed a seed round in 1999 and were working on our A round. We had many term sheets (it was 1999 and we had a pulse) and we were deciding which one to take. We ended up agreeing a term sheet for $16.5 million at a $15 million pre-money valuation.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. Once you take money from the generalpublic youre more restricted in what you can do. [

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Professor VC

FEBRUARY 12, 2015

I doubt Aileen Lee of Cowboy Ventures believed that a horse with a horn existed when she wrote Welcome To The Unicorn Club: Learning From Billion-Dollar Startups in late 2013, but she probably had no idea that it would become a hot buzzword in Silicon Valley and hit the cover of mainstream business press, Fortune Magazine. igthwghjg2q2g8hu4).

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. We plan to raise at a $5 million pre-money valuation. million pre-money. You simply draft up a series seed term sheet.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Both Sides of the Table

APRIL 3, 2010

He might be thinking, “whoa, you’ve got this killer portfolio company where my money was used to invest in this startup and now my money isn’t being used to follow on the previous round so I’m owning less of the company than I should.&#. - Now, let’s get more ominous.

Pre-Money Valuation 226

Pre-Money Valuation Venture Capital LP Term Sheet 226

venturehacks.com

OCTOBER 21, 2010

Venture Hacks Good advice for startups. SUPPORTED BY Products Archives @venturehacks Books AngelList About RSS The Option Pool Shuffle by Nivi on April 10th, 2007 “Follow the money card!&# – The Inside Man, Three-Card Shuffle Summary: Don’t let your investors determine the size of the option pool for you.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Hippoland

AUGUST 31, 2018

He has done incredibly well financially on his past two startups, and he’s now building his 3rd company. And if you do the math of VCs buying roughly 20% of a startup, valuations can be upwards in the $50m+ range for today’s series A rounds! And there’s a huge difference in valuation.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

www.currentlyobsessed.com

MAY 28, 2010

Instead of “We are worth about $5m because we have done XYZ and we need to raise $1m, so let’s sell 20%&# it’s better to think about valuation as an output variable, like “Let’s raise $2mm and sell 33%, our (pre-money) valuation is therefore $4mm.&# Like this post?

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42

Hippoland

AUGUST 31, 2018

He has done incredibly well financially on his past two startups, and he’s now building his 3rd company. And if you do the math of VCs buying roughly 20% of a startup, valuations can be upwards in the $50m+ range for today’s series A rounds! And there’s a huge difference in valuation.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

Business Plan Blog

DECEMBER 26, 2013

The term sheet is a legally binding document and should include the following elements: - Offer terms, such as: Company, founder and investor details. Pre-money valuation. Startup Funding' Amount to be invested. Type of security and structure.

Angel Investor 51

Angel Investor Due Diligence Pre-Money Valuation Angel Groups 51