Pascal's View

JULY 9, 2017

Unfortunately, what the CEO/founder forgets most often is that the notes have a multiplier effect in the post-money calculation; the more notes and the further the cap is from the new priced equity, the greater the variance between actual and nominal pre- and post-money valuations. It’s going to be great!”.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

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

Both Sides of the Table

MAY 19, 2018

A detailed financial model that shows your anticipated revenue, costs and profits (Income Statement) as well as your balance sheet and cashflow statements. The buyer is shopping for equity in startups and the seller is looking for cash in exchange for equity and shared governing control of his or her company. No problem.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Berkonomics

AUGUST 3, 2023

My experience with early valuations by founders for friends… I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round and had to “clean up” the cap table more than a few times over the years. Many accelerators have come and gone during these past five years.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

David Teten

NOVEMBER 14, 2019

I wrote recently about Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? Since then, I’ve talked with a number of other firms, and greatly expanded my database: Who are the major Revenue-Based (RBI) Investing VCs? Revenue-based investing VC. Revenue-based investing VC.

SBIC 60

SBIC SBA Cap Table Database 60

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

Gust

NOVEMBER 15, 2012

But by far the biggest issue is that the very essence of public markets (and what makes them “public”) is that the SEC mandates an enormous amount of transparency, including complete quarterly financial statements, complete publication of the company’s cap table including all significant shareholders, and so forth.

Seed Stage 131

Seed Stage Hockey Stick Cap Table Liquidation Preference 131

Austin Startup

AUGUST 20, 2017

They’re looking to be paid properly in the context of the overall salary structure, including cash, benefits, and equity, and to be paid commensurate with performance. Your Cap Table is something that deserves constant care and attention. Messy cap tables can come back to haunt you when you do a financing or sell the company.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

David Teten

DECEMBER 3, 2019

Private equity and venture capital investors are copying our sisters in the hedge fund world: we’re trying to automate more of our job. . In the private equity universe, most Partners have primary training as deal-makers, not as managers. (To see the video above, please click the image, and then click on the Play button.).

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Berkonomics

JUNE 8, 2017

I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round, and had to “clean up” the cap table more than a few times over the years. Venture, private equity and more: Here we lump a large number investor classes into one.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Feld Thoughts

AUGUST 12, 2011

When we were last with Dick and Jane on Finance Fridays, our fearless entrepreneurs were figuring out how to split up their founders equity and account for an investment from Jane. Revenues and costs should both be based off of a robust set of assumptions. as a C-Corp in Delaware. Build a financial model that forecasts the P&L.

Balance Sheet 136

Balance Sheet Forecast Cap Table Early Stage 136

This is going to be BIG.

DECEMBER 21, 2017

Nothing seems to apply--you're not a tech company, you bootstrapped your way to millions in revenues before taking on capital, and you sell mostly through brick and mortar. Technically, that's what we called it, but it didn't seem entirely appropriate given that it had already been up and running for years and had millions in revenue.

Cap Table 90

Cap Table Cofounder Valuation .Net 90

Spencer Fry

APRIL 17, 2017

If this is the case, you may find yourself starting all over with little revenue (if any), a 1-2 person team that might be consulting on the side to pay bills, and no marketing spend. How much and at what terms, is up to the deal you strike with your investors, but you can’t take money without giving away equity.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Hippoland

MAY 16, 2018

Here’s what’s happening in the equity world (from my perspective): 1) Token sales in the crypto-world do affect “equity” raises. (I I put “equity” in quotes because I include convertible notes and convertible securities in this category.) This leads me to point #3.

Seed Stage 48

Seed Stage Valuation Convertible Security Equity 48

Hippoland

MAY 16, 2018

Here’s what’s happening in the equity world (from my perspective): 1) Token sales in the crypto-world do affect “equity” raises. (I I put “equity” in quotes because I include convertible notes and convertible securities in this category.) This leads me to point #3.

Seed Stage 48

Seed Stage Valuation Convertible Security Equity 48

David Teten

OCTOBER 1, 2015

Not surprisingly, the list above also is ranked from least to most equity stake in an investment for the investor, relative to the cash they invest. How would one set up such a startup to eventually raise capital from outside VCs, who will be wary of ‘dead equity’ (i.e., equity that belongs to departed cofounders)? The cliffs?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Berkonomics

JANUARY 20, 2010

I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round, and had to “clean up” the cap table more than a few times over the years. Taking this kind of money has a number of pitfalls you should be aware of.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

blog.simeonov.com

FEBRUARY 22, 2010

It outlines key points of agreement between founders around IP ownership, equity ownership, vesting, etc. The number of separate documents may vary but they fall into two categories: Those related to equity, typically a restricted stock purchase agreement (RSPA) and associated escrow and other agreements.

Founder 44

Founder Vesting Agile Startup 44

YoungUpstarts

OCTOBER 7, 2015

Writing the check each year stings a little, but I only have to look at the sheer scope of what we are able to achieve with it, and the revenue that it brings, to understand that we probably wouldn’t have a fast growing business without it. . They’ll likely be trading salary for equity and a heavy dose of uncertainty.

Cap Table 100

Cap Table Intellectual Property Salary Bootstrapping 100

Rob Go

FEBRUARY 24, 2014

Big user bases, but tiny revenues. The userbase is also largely international, as is most of the revenue, another ding on the company’s ability to monetize. Sequoia essentially paid a very high price for Whatsapp equity with little or no external market validators. It’s kind of like chat and instant messenger.

Cap Table 78

Cap Table Valuation Finance Institutional Investors 78

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. You can no longer simply look at the cap table and estimate your return. As an example, most Unicorn CEOs still have no idea that discounts, coupons, and subsidies are contra-revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Startup Lessons Learned

JUNE 9, 2020

A complete collapse of revenue that simultaneously affects your employees and your customers, your partners, your investors, everyone all at once and all the news is bad. We didn't want people not having their equity. And the good thing is, was it included people that were already in our cap table. So then what?

Silicon Valley 60

Silicon Valley Hosting Cofounder Employee 60

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. It costs you a little more equity, but being able to play the two firms off each other (as well as ask one if the other is being out of line) is invaluable. This is a good plan for someone with kids, because it takes mostof the risk out of starting a startup.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

David Teten

MARCH 18, 2021

Thirty-four VC firms in OpenVC call themselves “early-stage” Yet, 30% of those don’t actually invest in pre-revenue startups. Revenue-Based Finance and Flexible VC investors invest using “alternative VC” structures, as opposed to conventional preferred equity and convertible notes. 5) Structure-defined funds.

Technical Review 78

Technical Review Cofounder Venture Capital Deal Flow 78

abovethecrowd.com

JUNE 2, 2021

These are the parties on the cap table prior to the transaction. He then argues Squarespace, as a result of choosing a Direct Listing, ended up with a valuation multiple of 6.7X, which he says compares unfavorably to its public peer $WIX (which has an 8X forward revenue multiple). Party B: The investment banks.

IPO 82

IPO Customer Matching Silicon Valley 82