Ten million users is the new one million users

Chris Dixon

It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As. - Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending. Some observations: - Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months.

Convertible Debt – Early Versus Late Stage Dynamics

Ask The VC

Traditionally, convertible debt was issued by mid to late stage startups that needed a financing to get them to a place where they believed they could raise more money. Thus, these deals were called “bridge financings.”. The terms were basically the same unless the company was fairing poorly and there was doubt about the ability to raise new capital and / or the bridge was to get the company to an acquisition or even orderly shutdown.

Trending Sources

Budgets: Past Performance and Future Results

Florida Venture Blog

It dishes some knowledge on bridge financings and the auto industry predicament, all in one insightful post. projecting budgets forecasting vcfaq faqfriday bridge financingAlmost all investment literature warns you that past performance is no guarantee of future results.

Budgets: Past Performance and Future Results

Florida Venture Blog

It dishes some knowledge on bridge financings and the auto industry predicament, all in one insightful post. Tags: projecting budgets forecasting vcfaq faqfriday bridge financing

Knowledge Is Power: Convertible Note Financing Terms, Part I

Gust

It should therefore come as no surprise that an asymmetry of information exists, mostly gleaned from experience, between founders and investors in a venture financing deal. For a traditional VC financing round structured as a sale of preferred stock, the best resources I can recommend are the Term Sheet Series by Brad Feld and Jason Mendelson and Startup Company Lawyer by Yokum Taku.

Thoughts on Convertible Notes

K9 Ventures

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. The bridge to the Pacific ocean.

4 Tips for Getting a Business Loan

Inc Startups

The downside to this route, of course, is the lengthy paperwork and delay in securing financing due to bureaucracy." Look at alternative financing for short-term needs. Asset-based lending and factoring are good bridge financing avenues for many small businesses," says Ross.

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How to Evaluate an Offer from a Startup Incubator

The Startup Lawyer

Like any issuance of stock or investment, one of the main things a startup should be concerned with is: Is this going to fuck up a future financing ? If the terms won’t hinder a future financing, then your startup is good to go. If not, the incubator is just a bridge financing to potentially nowhere for your startup. Great news — your startup just got accepted to an incubator!

The Series A Round is the New Series B Round

Jeff Jordan

The venture industry is awash with talk of the “Series A Crunch”, where it’s getting progressively more challenging for seed companies to land follow-on financing. A number of factors are coming together to create this crunch: A significant supply/demand imbalance has emerged between seed and Series A financings coming out of the economic near-meltdown of 2008-2009. as many seed financings as A-round financings, whereas historically these were more in balance.

Startups and VCs Should Avoid “Pier” Funding

Both Sides of the Table

Often when startups who have raised venture capital need another round of financing they will turn to their existing investors to give them money before raising from outsiders. a loan) that is later converted to equity at the time of the next financing.

The Option Pool Shuffle

venturehacks.com

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# That does work if the company gets sold before another round of financing. Venture Hacks Good advice for startups.

Mobile Backstage Grabs €1 Million, Opens Office In San Francisco

ArcticStartup

Helsinki-based Mobile Backstage has secured a €1 million bridge financing round. Investors include Finverra, the Finnish government-backed investment company, as well as Mission Ltd, the management team, as well as a group of angel Investors.

Don't Run Out of Cash: 3 Growth-Company Case Studies

Inc Startups

But the fast growth had a downside: Cramton realized he was losing control of the company''s finances. Would you like to do 18 parties of 200 people?'' " As the company grew, Cramton lost his handle on its finances. Nice growth company you got there. So how can you stay on track?

What is a convertible bridge note with a price cap?

Startup Company Lawyer

I seem to be doing a lot of pre-Series A convertible bridge note financings these days. 50%) or warrant coverage are typically more company-favorable than a Series A financing where a valuation is set. I think many sophisticated angel investors realize that convertible bridge notes do not adequately compensate angel investors for the risk that they take in funding early-stage companies.

Are VCs Lemmings?

Thinking About Thinking

If a stream or river interrupts their path [no exit market], they swim across [bridge financings]. Many in the entrepreneurial ecosystem (VCs included) have used the phrase, “VCs are all lemmings.” Is this true? Is it not? Before answering that question, let us take a look at the lemming migration across the Norwegian coast. How can you compare a VC to a lemming, without detailed knowledge of lemming migratory patterns?

The Basics of Small Business Loans [WEBINAR]

Up and Running

Hopefully I’ll be able to add some value with some of the financing needs that your businesses may need. Then we look at what the small business financing needs. “How do I tackle my financing needs as a startup?” They’re pretty good options for financing the business.

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ProfessorVC: Why I Hate Convertible Debt.Let Me Count the Ways

Professor VC

This will also serve as a good pointer for all the entrepreneurs who ask why I am not interested in their company led convertible note financing round. Is This a Bridge or a Pier? This can make it much more difficult to get any bank financing, new investment, and trade credit. Depending on how the transaction is structured, investors could block a financing and potentially take over the intellectual property. In cases where it is truly a bridge financing (i.e.

Founders Shares: How do you split them up?

www.copelandfirm.com

He can assist you in any stage of the process, from formation, seed and venture financing, franchising, mergers and acquisitions, to business purchase and sales transactions.

Some Thoughts On Foursquare

A VC : Venture Capital and Technology

Our portfolio company Foursquare closed a second round of financing yesterday. This was a much covered financing process and also much criticized. The Company could have closed a financing at a very attractive valuation in two or three weeks if they had chosen to. But as they kicked off the financing process, a fair bit of acquisition interest in the company materialized.

SEC Defines Venture Capital

Venture Chronicles

Here’s what would, according to this definition, be illegal for a venture capital fund to undertake: Private investment in public entity (PIPE) financing. This has been a lucrative area for VC funds to invest in and has also been critically important for companies to tap when other finance options (e.g. Bridge financing. The SEC fulfilled their obligation under the Frank-Dodd financial reform bill and defined what venture capital is.

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. For example, if the company raises a round of venture financing the outstanding principal and interest usually automatically converts into equity of the same type as is being sold to the VCs.

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. For example, if the company raises a round of venture financing the outstanding principal and interest usually automatically converts into equity of the same type as is being sold to the VCs.

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. For example, if the company raises a round of venture financing the outstanding principal and interest usually automatically converts into equity of the same type as is being sold to the VCs.

Know the Mindset

ithacaVC

It may explain why Fund Y tries to protect itself, via deal terms, from pay to play provisions that would kick in with respect to future financings. Alternatively, if a company is trying to raise bridge financing and one of the existing investors (call it Fund Z) is pushing hard for downside protection that is well beyond normal, there may be justified/understandable reasons for Fund Z’s position.

This Week in VC Episode 6 with @Jason Calacanis: Best One Yet

Both Sides of the Table

Often times when companies raise “bridgefinancing (this is money from internal investors. Doxo (November 2009 financing, just announced in May 2010 as company exited stealth mode). We just had our sixth episode of #TWiVC and I felt this one was the best.

Startup Post-Mortem: Admazely and why it failed

ArcticStartup

In 2012 Søren Holbech joined and later they got seed financing: SEED Capital and business angels Martin Bochineck and Christina Rind Helsbro invested about 600 000 Euro in the startup. And so I spent not that much time on the bridge financing, as long as I was convinced it was in place.

The High Cost of Optimism

Will Price

The insiders and management are then faced with the dreaded prospect of a down round or a bridge financing to tide the company through to meeting its original plan. The Standish Group , which analyzes IT projects, reported that in 2004 only 29% of IT projects succeeded, down from 34% in 2002. Cost over-runs from original budgets averaged 56%, and projects on average took 84% more time than originally anticipated.

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The Cost of Optimism

Will Price

The insiders and management are then faced with the dreaded prospect of a down round or a bridge financing to tide the company through to meeting its original plan. The Economist recently ran a wonderful piece on the sorry state of project management. The Standish Group, which analyzes IT projects, reported that in 2004 only 29% of IT projects succeeded, down from 34% in 2002.

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Is Europe going to emasculate venture with misguided regulation ?

Fred Destin

Imagine you are a small startup from the south of France posing a threat to IBM on one of its product lines but currently bridge financed by your investors.

Update on Carried Interest Legislation

Recent Buzzes - VC Experts, Inc.

Those certain services are (1) advising as to the advisability of investing in, purchasing, or selling any specified asset, (2) managing, acquiring, or disposing of any specified asset, (3) arranging financing with respect to acquiring specified assets, and (4) any activity in support of any of the foregoing services. In 2011, the original bridge financing on the office building held by OB LLC cannot be rolled over, and the lenders foreclose on the office building.