View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Previous venture firms’ specific involvement on the cap table should be noted here, though. First, it’s helpful to enumerate the startup’s funding history to date.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

David Teten

JANUARY 19, 2021

Part of the magic of revenue-based financing is how historical performance and strong, achievable financial projections are ultimately the backbone of how RBI/RBF investment decisions are made.” Further reading: The Evolution of Entrepreneurial Finance: A New Typology. Inaccessible to great majority of early-stage companies.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

David Teten

AUGUST 19, 2019

Since 2017 we’ve managed $3 million in revenue-based financing, which helps cash-strapped technology companies grow. Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. For RBI, return caps of 1.2x-1.8x We agree on a Return Cap which is a multiple of the initial investment (typically 3-5x).

Revenue 60

Revenue Technical Review Software Review Equity 60

Hunter Walker

AUGUST 8, 2023

The reality is lots of companies – many of them quite promising – have already undergone, or will be facing, next financings which “clean up” old cap tables. Whatever gets reported is just the tip of the iceberg. And that’s what’s happening here. Soft Acquisition Market.

Portfolio 98

Portfolio Cap Table LP Valuation 98

VC Adventure

OCTOBER 8, 2012

Given the prevalence of convertible debt as a seed financing instrument, an increasing number of companies we look at have some kind of convert in place. This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation.

Cap Table 48

Cap Table Dilution Equity Deal Structure 48

ithacaVC

SEPTEMBER 10, 2012

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership. Actually, I got many questions.

Dilution 53

Dilution Employee Cap Table Stock 53

Both Sides of the Table

OCTOBER 7, 2014

5 million was always the classic definition of an A-round between the late nineties (crazy financings aside) and say 2007. Entrepreneurs started demanding that VCs call their first-round financings “seed” rounds even if they were $3 million. It is less about actual money and more about structure of your Cap Table.

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

Hunter Walker

MARCH 14, 2019

All the disruption can be pretty jarring to an entrepreneur, especially in situations where the exiting partner represents the top line on your cap table. You’ll often need the support – both structurally and symbolically – of some other investors on the cap table to make the case for some of the ideas below to work.

Cap Table 95

Cap Table Dilution Silicon Valley Portfolio 95

Gust

OCTOBER 8, 2014

Cautionary note: No competent VC is actually fooled when you show up after raising $6M in seed financing and say you’re now raising an A! 5 million was always the classic definition of an A-round between the late nineties (crazy financings aside) and say 2007. It is less about actual money and more about structure of your Cap Table.

Cap Table 136

Cap Table Silicon Valley Term Sheet Non-Compete 136

Up and Running

SEPTEMBER 20, 2021

This is all incorporated into a document called a Cap Table. . A cap table will help you in the strategic management of business decisions. Wondering what a cap table is, its importance, and how you can maintain it to expand your business? What is a cap table? Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

keen.io

FEBRUARY 5, 2013

To begin answering this question, I started on a quest to understand startup financing. This book was written to help founders negotiate financing with investors, but it really helped me understand Keen’s financial situation, and I highly recommend it to anyone joining a startup. First, I read Venture Deals by Brad Feld. 8 and 2.5%

Salary 50

Salary Equity Startup San Francisco 50

Feld Thoughts

AUGUST 28, 2015

My answer was simple – I would have given the early seed investors some percentage of the company as part of the financing. Given the amount raised, the new financing, and the cap, I would have asked the seed investors to waive the terms and instead accept a smaller percentage of the company than they would have otherwise gotten.

Cap Table 70

Cap Table Seed Stage Angel Groups Dilution 70

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. In this situation, the FFAs are diluted from an ownership percentage, but enhanced economically.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

David Teten

AUGUST 21, 2019

Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Less or no dilution. A company with that mindset is dramatically less risky, because it’s not dependent on the financing markets for continued viability. But should they? Optionality.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Both Sides of the Table

FEBRUARY 8, 2016

Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive. The terrible consequence is that some great companies struggle to get financed. If you need to clean up your own cap table first – while very hard to do – it will make outside funding easier.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

ithacaVC

APRIL 5, 2011

I am a huge fan of simple cap tables. A cap table is a written record (in Excel, for example) of who owns stock in your company. It should also provide a combined summary so that it is easy to see who owns what % of the company on a fully diluted and converted basis. So, we needed a solution.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

The Next Web

OCTOBER 7, 2013

Cap tables sound intimidating. Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. As stated earlier, investors will dilute ownership upon nearly every round of financing. Converting percents to cents (and dollars).

Engineer 129

Engineer Dilution Option Pool Vesting 129

This is going to be BIG.

JUNE 2, 2010

I’m sure you’ll start seeing some rounds that essentially should be B rounds according to what the current cap table looks like, except that there’s a Series A level of progress, and about a million bucks in product overspend that didn’t really lead to a business. Once you have that, keep your focus simple. Try to prove one thing.

Cap Table 106

Cap Table Seed Stage .Net Venture Capital 106

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. Those new shares are created out of thin air by the company, and will dilute all of the current stockholders. Since you still have 100,000 shares, your ownership percentage is now dropped to 0.8333% -- you just got diluted. In a startup, dilution happens, and you just need to factor it in. diluted) terms.

Equity 56

Equity Employee Vesting Preferred Stock 56

Hunter Walker

SEPTEMBER 5, 2021

Startup CEOs Should Test Strength of Cap Table Every ~6 Months To Know Where They Stand. As a venture fund I might have a strategy which says “for every dollar I invest into companies, I will hold one dollar in reserve for additional financings.” Instead my recommendation is to ask every ~6 months or so in-between financings.

Cap Table 94

Cap Table Seed Stage Syndicate Syndication 94

blog.simeonov.com

FEBRUARY 22, 2010

However, founder agreements are not set in stone and it is common for them to be tweaked by a little or a lot during the first financing by professional investors. The only way to remove their equity holding in the cap table is by buying them out or through a recapitalization of the company. more details ]. Board member.

Founder 44

Founder Vesting Agile Startup 44

Both Sides of the Table

FEBRUARY 22, 2011

I understand the appeal of having many VC firms on your cap table. You may feel as I did in 1999 that the more smart people around the table the more intros you’ll have, the more sage advice you’ll receive and the more impressive you’ll seem to outsiders. The Perils of Many. There – the secret is out.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

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.&# Update : Check out our $9 cap table which calculates the effect of the option pool shuffle on your effective valuation. share to $1.00/share:

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. By the first quarter of 2016, the late-stage financing market had changed materially. Investors were becoming nervous and were no longer willing to underwrite new Unicorn-level financings at the drop of a hat. It will also minimize future dilution.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. It’s not pretty, but it happens.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

venturehacks.com

MARCH 21, 2008

If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like. All our products Pitching Hacks , Cap Table , and Co-founder Interview. Learn more. Buy it here.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44