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Startup Due Diligence Is Not a Mysterious Black Art

Gust

After you have successfully attracted angels or venture capital with your business case, your million dollar product idea, and you have a signed term sheet, there is still one more hurdle to overcome before investors write the check. This is the dreaded “due diligence” process.

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Which books would you recommend to a VC analyst-associate?

Gust

The Business of Venture Capital. Raising Venture Capital for the Serious Entrepreneur. A Venture Capital Insider Reveals How to Get from Start-up to IPO on Your Terms. Term Sheets & Valuations. A Line by Line Look at the Intricacies of Term Sheets & Valuations.

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Investors: Avoid These Investment Event Problems

Gust

Angel investment events where the group investment is supposed to go to the winner, but the winner ends up hating the term sheet. Usually these term sheets involve convertible notes, which are supposed to convert to equity at the next round of financing, like when the serious venture capitalists do a Series A.

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There Is Only ONE Silicon Valley

Gust

Valuations are generally higher in Silicon Valley; term sheets are different; capital sources are different; building a management team and Board of Directors requires a different strategy; and I’ve just begun to scratch the surface.

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What are the most valuable recommendations in order to raise money from VCs connected via Gust?

Gust

Every investor on Gust is an Accredited Investor that has been provided access to the system by either an official angel group known to Gust, a venture capital fund, or another startup in which they are investing. Any legitimate investor who finds you through Gust will also contact you through Gust!

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What is the Definition of a Seed Round or an A Round?

Gust

I had very smart entrepreneurs where I gave the company $2-3 million and we raised anywhere between $3-5 million and when I put A-round in the term sheet they had their lawyers change it back to seed rounds. Invested Interests cap table venture capital' I saw this myself a few times in a row. Reblogged via [link].

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Knowledge Is Power: Convertible Note Financing Terms, Part III

Gust

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.

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