cdixon.org

AUGUST 3, 2012

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.

Early Stage 70

Early Stage Bridge Financing Valuation B2B 70

Gust

SEPTEMBER 29, 2011

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.

Finance 173

Finance Term Sheet Preferred Stock Bridge Financing 173

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Plus, if you price it then when you go to your next round of financing there is no haggling with future investors on what the note should be priced at. I really just want to champion Finance 101 to entrepreneurs. This week.

Venture Capital 328

Venture Capital Liquidation Preference Ratchet Warrant 328

K9 Ventures

MARCH 23, 2011

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.

Pre-Money Valuation 133

Pre-Money Valuation Valuation Liquidation Preference Bridge Financing 133

Both Sides of the Table

MAY 23, 2010

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.

Startup 321

Startup Bankruptcy Warrant Burn Rate 321

Both Sides of the Table

MAY 15, 2010

Often times when companies raise “bridge” financing (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.

Stealth 312

Stealth SEC Accredited Investor SEM 312

David Teten

AUGUST 19, 2019

Does the traditional VC financing model make sense for all companies? 2018 also had the fewest number of angel-led financing rounds since before 2010. John Borchers, Co-founder and Managing Partner of Decathlon Capital, claims to be the largest revenue-based financing investor in the US. Factoring, MCAs and receivables financing are all short-term oriented with pay-back periods measured in weeks, months or quarters, while RBI is generally measured in years.

Revenue 60

Revenue Term Sheet Prospectus Equity 60

ithacaVC

FEBRUARY 20, 2011

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.

Bridge Financing 40

Bridge Financing IPO Finance Pay to Play 40

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Plus, if you price it then when you go to your next round of financing there is no haggling with future investors on what the note should be priced at. I really just want to champion Finance 101 to entrepreneurs. This week. On the phone …. Me: So, you raised venture capital? Him: Yeah.

Liquidation Preference 150

Liquidation Preference Ratchet Warrant Stock 150

Venture Chronicles

NOVEMBER 22, 2010

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.

SEC 42

SEC Venture Capital Redemption Bridge Financing 42

The Startup Lawyer

FEBRUARY 4, 2011

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!

Incubator 83

Incubator Term Sheet Pre-Money Valuation Valuation 83

Startup Company Lawyer

JANUARY 11, 2010

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.

Valuation 35

Valuation Angel Investor Finance Bridge Financing 35

Fred Destin

OCTOBER 4, 2009

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.

Europe 36

Europe Ratchet Bridge Financing Private Equity 36

venturehacks.com

OCTOBER 21, 2010

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.

Option Pool 76

Option Pool Dilution Pre-Money Valuation Valuation 76

Professor VC

APRIL 7, 2011

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.

San Jose 31

San Jose Intellectual Property Valuation Finance 31

Up and Running

JUNE 25, 2014

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.

Small Business 134

Small Business SBA Bankruptcy Finance 134