Both Sides of the Table

MAY 27, 2013

In addition to helping manage the board Chris also helps represent the interests of the angel investors / common stock holders. And you can often throw in a separate action like approving stock-option grants, getting approval for CAPEX spend, discussing fund raising timing – whatever. That in itself is quite a challenge.

Advisory Board 365

Advisory Board CTO Hire Fractional CTO Los Angeles 365

Both Sides of the Table

JULY 16, 2010

But VC is an “illiquid asset&# so funds didn’t disappear quickly - In 2000/01 the stock market quickly adjusted punishing investors in the NASDAQ and in individual public technology stocks. What accelerated this was the collapse of the public stock markets.

LP 311

LP Technical Review Early Stage Silicon Valley 311

Both Sides of the Table

JULY 22, 2010

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. 4 * $4 million) and not $4 million.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

AUGUST 15, 2012

Side note: Image is of “team awe.sm” – it seemed a better image than any of the cheesy stock photos of a boardroom. I’m going to start suggesting that some of the startup founders I work with take a board seat at another startup. I think we’ll all benefit. Why are they always so bad?

Founder 294

Founder Vesting Startup Stock 294

Both Sides of the Table

OCTOBER 30, 2014

It’s true the some VCs have started writing so many checks that they resemble stock pickers but the majority of us still have less than 10 board seats at any time and tend to go pretty deep so the result is that we care deeply about where we commit our time.

Technical Review 418

Technical Review Software Review Due Diligence CTO Hire 418

Both Sides of the Table

SEPTEMBER 10, 2015

I met with Jeremy years ago when he had a startup that was building a fantasy sports app where you picked players in a stock-market style and their value moved up and down over time.

Southern California 150

Southern California Philadelphia Mobile Stock 150

Both Sides of the Table

APRIL 20, 2011

The Exchange Fund – This allows the entrepreneurs to diversify their founders stock into other portfolio companies stock. CEO Network – CEO’s from the portfolio companies are introduced to each other. This becomes a support group and allows them to help each other succeed.

Pre-Money Valuation 284

Pre-Money Valuation Technical Review Cofounder Cram Down 284

Both Sides of the Table

JANUARY 21, 2010

Forget to get around to setting up that Employee Stock Option Plan and want to be able to give the early guys their options at a low strike price? They usually ask for warrants (basically like a stock option) in exchange for taking a deferred fee. Founded it as a California LLC but your potential VC wants a Delaware C-Corp?

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Both Sides of the Table

SEPTEMBER 18, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. Less than you’ll probably grant your most junior employees in stock options? Stock Option plans.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

DECEMBER 27, 2011

I always remind this to journalists who ask me about public stocks. So while the simplest way that people often evaluate stocks is by P/E ratios (price-to-earnings), one also needs to look at other metrics such as the PEG (price-to-earnings-growth). [of

Startup 418

Startup Revenue Technical Review Flash 418

Both Sides of the Table

APRIL 19, 2011

Mark: 10% warrant coverage is like stock options. Icing is the warrant for banks – stock they can buy in future but don’t have to buy so they make their $$ later in the future. And he said ok got it. So he got a 30 day stay for more watrrant coverage. Backstopping is when banks feel they are protected by VC’s investing in the company.

Acquisition 304

Acquisition Warrant Customer Term Sheet 304

Both Sides of the Table

MARCH 1, 2016

This strangely may come even more quickly in the more successful funds, because any funds (ours included) who still hold some public stock from a recent IPO will likely be seeing write-downs sooner due to the immediacy and transparency of public stocks being repriced.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Both Sides of the Table

AUGUST 2, 2014

A founder wants his co-founder to leave and the stock agreement says you can take all of his unvested stock back and wants you as the VC to be the bad guy. Surely having some peace at the time of exit is better than fighting over relatively small amounts of stock. Every circumstance is different.

Cap Table 346

Cap Table Cofounder Stock Acquisition 346

Both Sides of the Table

JUNE 17, 2017

It was a stock option incentive related “expense” but I bet you didn’t know that because in an era where we only read the headlines — they must be a train wreck losing billions. I don’t want to pretend that stock-option grants have zero impact on you as a shareholder. Stock option grants dilute your ownership in the company.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Both Sides of the Table

JULY 27, 2014

We pointed out; however, that some of the recent trends have moved in the opposite direction notably Uber trying to crack down on who can sell stock and to whom.

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Both Sides of the Table

AUGUST 25, 2015

Last night I wrote a post about how the fall in the stock market over a 3-day period may affect the venture capital markets. This morning the US stock markets are rallying. They said stocks were a bargain. public stocks go up and privates can grow into IPOs; or. He said US stocks traded at about 13.8 So now what?

Balance Sheet 150

Balance Sheet Valuation Burn Rate Stock 150

Both Sides of the Table

OCTOBER 10, 2011

Given how badly the announcement of the splitting went and their inability to control the PR cycle (or their stock price!) I know of at least one major high-end cosmetic & fashion brand that actively limits stock of its most sought after product to even their best customers.

Customer 287

Customer Technical Review Caching PR 287

Both Sides of the Table

DECEMBER 6, 2013

I turned down free “advisory stock” in the early days and told Aaron that I’d much rather just be his independent friend and mentor for anything he needed and that I really just wanted to see him build a successful business for himself and for LA. They have raised now a total of $22 million.

San Diego 344

San Diego Technical Review Seed Capital Sacramento 344

Both Sides of the Table

FEBRUARY 19, 2019

Without these protections there is little to stop a board, for example, from issuing new cheap stock that dilutes all of the shareholders so that certain individuals could take control of the company. Equally it could vote to increase the stock option plan to 99% of the company.

Startup 204

Startup Dilution Government Stock Options 204

Both Sides of the Table

FEBRUARY 20, 2019

If angel investors are pressuring you to set up a board and if you don’t have the leverage to push back a little then I might suggest a 3-person board in which all 3 seats are appointed by the common stock and you agree to appoint one of these seats to the angel investor but perhaps make it either time based or event based.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Both Sides of the Table

FEBRUARY 23, 2015

There is a second set of career discussions I have even more frequently than my “angel yourself” advice but this type is almost never discussed publicly in blogs, which tend to emphasize only billion-dollar opportunities, 20-something technical founders and Silicon Valley elitism.

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

Both Sides of the Table

JULY 25, 2011

Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Or what “participating preferred&# stock is and how it can screw you. 3) VCs are anal about things like voting thresholds, seniority of their stock, protective provisions, etc. I never did.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

Both Sides of the Table

JUNE 8, 2010

My favorite two quotes of the weekend were: “Never trade your cat for somebody else’s dog” (referring to selling your company for stock to another privately held company – quote was from Alan. I’m going to save that for a future blog post. Nail it before you scale it” – I missed who said this but I love this quote.

PR 279

PR Technical Review Portfolio Customer Development 279

Both Sides of the Table

JUNE 27, 2021

At Upfront Ventures, we defined our “shots on goal” strategy based on 25 years of experience (we were founded in 1996): We take board seats and consider ourselves company-builders > stock pickers.

Bankruptcy 294

Bankruptcy Bridge Financing Portfolio Angel Investor 294

Both Sides of the Table

AUGUST 15, 2017

I’m usually more able to see their laptops than you can at the front and I promise you — best will the world — they are sneaking a peek at their email, stock prices, web, etc. It is a HUGE MF distraction. It’s human nature. Help them be their best selves by banning electronic devices if you want a productive meeting.

Early Stage 212

Early Stage Technical Review Email Valuation 212

Both Sides of the Table

MAY 4, 2013

Otherwise you’re a stock picker, which in this business isn’t a good thing. One of the major calibration pieces for me was where to find deal flow. As a VC you want to feel like you have “proprietary sources” of deal flow. I sorted out pretty early that lawyers were a great source of deal flow.

Early Stage 361

Early Stage Deal Flow Investment Bankers Technical Review 361

Both Sides of the Table

NOVEMBER 4, 2009

OK, you would own 0.25% of the stock. Now … these are stock options and not restricted stock so you’ll likely be taxed at a long-term capital gains rate. Stock vests for 4 years. Stock options are the icing on the cake. It’s clear to me that many people confuse learn with earn. Wait a second.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

MARCH 21, 2010

A “warrant&# is a right, but not an obligation for a company to buy stock in your company at a future date and at a pre-agreed price. Think of it as similar to an employee stock option. Make the warrants for common stock and not preferred stock. This is the same as with employee stock options.

Warrant 298

Warrant Dilution Startup Stock Options 298

Both Sides of the Table

SEPTEMBER 25, 2010

I believe you reward investors who make an early call just like on the public stock market. . “A startup could also give better deals to investors they expected to help them most&# – That is a quote from Paul on the “high resolution financing&# post.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

MAY 4, 2013

Otherwise you’re a stock picker, which in this business isn’t a good thing. One of the major calibration pieces for me was where to find deal flow. As a VC you want to feel like you have “proprietary sources” of deal flow. I sorted out pretty early that lawyers were a great source of deal flow.

Deal Flow 347

Deal Flow Early Stage Investment Bankers Technical Review 347

Both Sides of the Table

AUGUST 28, 2009

We do hand out stock options. Join because as we succeed so will you. Join because every year we’ve improved your CV to have an even better job in the future. And, oh, by the way. If they’re worth something some day that would be gravy.

PR 331

PR Software Review Ireland Germany 331

Both Sides of the Table

SEPTEMBER 5, 2012

Can you imagine investing in the stock market where your price was determined at a future date and the better that company performed the HIGHER the price you paid for that investment. I want 100% of my stock to convert at that lower price.” So in the end they all end up with Series A stock priced at the exact same price (say, $1.5

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

SEPTEMBER 10, 2021

Our fund (Upfront Ventures) recently returned >1x an entire $200 million fund just selling small minatory in secondary sales while still holding most of our stock for an ultimate public market exits. If we wanted to we could have sold > 2x the fund easily in the secondary markets with significant upside remaining.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

SEPTEMBER 28, 2013

So the tech team departed en masse to find the next great stock option scheme to make their big bucks. I hate when companies publish too much information about the total stock option allocations, the company valuations, the dilution faced in every round, etc. But we departed on good terms. But here’s the shitter.

Startup 417

Startup Dilution San Diego Stock Options 417

Both Sides of the Table

OCTOBER 12, 2014

Have you noticed the increase of founders selling their personal stock in what is known as a “secondary?” As I like to point out, the truth is often more nuanced. Smart entrepreneurs have often used this competition / appetite to invest to their advantage.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Both Sides of the Table

FEBRUARY 22, 2019

Most votes are for administrative tasks such as stock options, 409a valuations, meeting minute approvals, compensation increases, etc. every voice has the ability to sway a conversation and the tenor of the meeting. To be clear about one thing?—?almost almost nothing controversial is EVER voted on at a startup board meeting.

Strategic Investors 255

Strategic Investors Startup Stock Options Venture Capital 255