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What Does the Post Crash VC Market Look Like?

Both Sides of the Table

No blog post about how Tiger is crushing everybody because it’s deploying all its capital in 1-year while “suckers” are investing over 3-years can change this reality. It’s just math. IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad.

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Which Fundraising Round Should You Skip?

View from Seed

The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. No good investor would want the founder/CEO of a company to have insufficient ownership by the series A, and every founder I know is sensitive to taking too much dilution.

Dilution 149
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Why LP’s Passed on Seed Funds 10 Years Ago (And What’s Happened Since)

View from Seed

And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. We’ve had multiple companies in our early funds that hit bumps and had to raise flat rounds, which hurts from a dilution standpoint but doesn’t wipe out our position. So yes, seed funds will own less. But guess what?

Dilution 399
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How to Configure Your Startup Team

Both Sides of the Table

it’s the most expensive dilution you’ll ever face. Since it is sometimes hard to get the full context from a conference presentation, I have included blog posts links on the topics in which I have written fuller posts in the presentation itself. Quick summary: Be careful not to have too many co-founders.

Cofounder 388
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10 Reflections After 10 Years of NextView

View from Seed

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. If the company wasn’t that capital efficient, the fund may end up owning 2.5% In this case, the effective post-money is $2.5M / 2.5% = $100M. So it’s like this same fund actually invested $2.5M

IRR 205
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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

So taking the same fund raising round and assuming that the VC wants the options including before he or she funds (and before is totally standard) then the math works like this: Assuming a 15% option pool post funding then you need a 20% option pool pre funding (because the pool gets diluted by 25% also when the VC invests their money).

Valuation 405
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What Do Boards Actually Do?

Both Sides of the Table

I read commentary or Twitter or blogs and realize that there are also strongly held convictions that there are these evil VCs who do terrible things to mostly altruistic founders. There’s a lot of mystique about what happens at board meetings and a lot of imagined board-room drama.

Cofounder 217