Both Sides of the Table

APRIL 14, 2010

If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. Take liquidation preferences head on. It is 2010. But pass they will. Brain damage. Reputation.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   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.]

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. Myth #3: Take the Highest Valuation You Can Get. Who is in your tribe?

Finance 205

Finance Silicon Valley Valuation Startup 205

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. Redemption Rights What Are Redemption Rights?

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

Startup Professionals Musings

SEPTEMBER 26, 2015

Perhaps they're way off in their valuation (usually far too high), or paralyzed by fear at seeing the other terms, because they have no idea what's normal, and what's worth a fight to the death (their startup's). In very early startups, which have no valuation, the term sheet may specify a convertible note.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

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. In addition, the issuance of shares of common stock creates three potential problems. price the round).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Startup Company Lawyer

MARCH 14, 2010

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. If you really want to understand the nuances in venture capital financing documents, please review the NVCA model venture capital financing documents. . under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

AUGUST 30, 2010

Funnily enough I just answered this question yesterday on Quora when somebody asked, “Why would an early-stage investor specifically NOT prefer a convertible note structure to straight equity (e.g. a priced/valued preferred stock financing)?&#. Tags: Raising Venture Capital Startup Advice. 20-25% dilution).

Equity 319

Equity Early Stage Angel Investor Valuation 319

Startup Professionals Musings

MARCH 7, 2015

On the other hand, venture capital organizations typically look for needs that exceed $2 million. The average valuation for angel investments is $2 million, which will get you $500,000 for 20 percent of your startup. Every type of investor has comfortable ranges and limits. What business milestones have you met?

Preferred Stock 120

Preferred Stock Exit Strategy Equity Angel Investor 120

The Startup Lawyer

JUNE 22, 2010

For this article, let’s assume this equity is the Series A Preferred Stock purchased by a venture capital fund. For example, if a venture capital fund purchases Series A Preferred Stock at $1.00 Convertible Note Discount. As a sweetener to the angel investor (i.e.,

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

K9 Ventures

MAY 14, 2011

The funding for the incubator of accelerator may come from the principals running the incubator (as I believe is the case for AngelPad , i/o ventures etc.) The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000).

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Steve Blank

OCTOBER 24, 2017

Almost overnight the position of venture capitalist dictating the terms of the deal has disappeared (at least for “hot” deals). Traditionally, in exchange for giving the company money, investors would receive preferred stock, and founders and employees owned common stock. Filed under: Venture Capital.

Founder 245

Founder Technical Review CTO Hire IPO 245

www.quora.com

JANUARY 16, 2011

Find Questions, Topics and People Add Question Add Question Venture Capital Venture Capital Term Sheets Startups Term Sheets What are examples of good startup term sheets? The BVCA (British Venture Capital Association) docs are here, with a link to a term sheet [link] ets/fea. org/2009/02. org/index.php?op.

Term Sheet 41

Term Sheet Startup Angel Investor Wiki 41

Startup Company Lawyer

MARCH 12, 2009

Any company that raises venture financing will need to be a C corp in order to issue preferred stock. Most venture and institutional investors favor C corps because they may have separate classes of stock, allowing for the creation of various levels of preferences, protections, and share valuations.

LLC 61

LLC Stock Options Preferred Stock Stock 61

Gust

OCTOBER 5, 2011

Mandatory Conversion : The Notes and any accrued interest will be converted into the Company’s next issued series of preferred stock resulting in new money of not less than $1,000,000 (an “ Eligible Financing ”) at a discount to the per-share price of such preferred shares of 25% (the “ Conversion Price ” ).

Finance 79

Finance Preferred Stock Term Sheet Early Stage 79

Professor VC

JANUARY 17, 2008

If my math is correct, this is approximately a 31% IRR, which has to beat individual angel investments on aggregate and venture capital returns over the period of the study (1990-2007). Another comment which probably deserves more discussion is around valuation. return on investment after 3.5

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Gust

OCTOBER 21, 2011

What these approaches have in common is that they cap the investors’ upside such that even in the most spectacular of liquidity events, unless the notes convert to equity first at a lower valuation, angels don’t get anywhere near the payoff awarded to equity holders. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Hunter Walker

SEPTEMBER 29, 2022

Starting a venture capital blog post with 1970s country music lyrics is pretty uncommon, but so is writing about when and why an investor might choose to sell equity before the company exits. All the preferred stock is pari passu and behaving honorably in the best interest of the company?

Venture Capital 122

Venture Capital Cap Table LP Equity 122

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.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

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. I call this the “dueling blowfish” problem.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM 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. Leave a Reply Click here to cancel reply.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

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. As many of you know, VC investors are typically issued shares of preferred stock, not common stock.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

abovethecrowd.com

FEBRUARY 24, 2015

An unprecedented 80 private companies have raised financings at valuations over $1B in the last few years. The size of these companies’ private valuations may be similar to a traditional public company valuation, but that is where the similarities begin and end. We are in a risk bubble.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

www.paulgraham.com

APRIL 28, 2010

Another concept we need to introduce now is valuation. I say "in theory" because in early stageinvesting, valuations are voodoo. As a company gets more established,its valuation gets closer to an actual market value. As a company gets more established,its valuation gets closer to an actual market value. Better how?

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Gust

OCTOBER 3, 2011

If a company is appropriate for angel financing , for example, it is highly unlikely that it would also be in a position to raise venture capital, and vice versa. Finally, north of, say, $10m – $20m , you’d be getting money from a later stage venture capital fund, whose paperwork will be similar to the earlier VCs.

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Gust

AUGUST 6, 2014

two angel groups investing money in Series Seed Preferred stock purchase. a single venture capital fund putting in the full amount as Series A Convertible Preferred investment. One of those is to draw up a term sheet themselves, setting a valuation, terms and target amount.

Term Sheet 170

Term Sheet Lead Investor Preferred Stock Common Stock 170

Board Effect

MAY 10, 2019

Cap tables are throughout these negotiations to model potential pre- and post-money valuations. Most businesses prefer to keep this list as specific as possible; for example, listing names as they appear on the company’s stock certificates. It’s also common for businesses to list the “employee pool” of shares as a single party.

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

www.paulgraham.com

APRIL 28, 2010

You give a startup money and they give you stock. Youllprobably get either preferred stock, which means stock with extrarights like getting your money back first in a sale, or convertibledebt, which means (on paper) youre lending the company money, andthe debt converts to stock at the next sufficiently big fundinground. [

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63

Professor VC

JUNE 6, 2016

I can just picture Mr. Rogers saying "Children, can you say participating preferred stock with an uncapped 3x liquidation preference and a full ratchet?" Some are able to offer better terms (pro-rata rights, lower valuation caps) than an individual could get. Well, maybe so after watching his middle finger salute.

Syndicate 28

Syndicate Syndication Cap Table Ratchet 28

www.vccafe.com

MARCH 11, 2013

Venture Capital Cafe > Startup Resources (Updated Mar 2013). Boilerplate Venture Funding Documents. National Venture Capital Association â?? Raising Venture Capital. Seed Stage Valuation Guide. Venture Hacks equity section. Cap Ventures. Capital Factory. Capital IQ.

Software Review 53

Software Review Technical Review Startup 53