ReadWriteStart

JANUARY 27, 2011

For a more elaborate explanation of the deal, please read my blog post 1M/1M: Alternative Financing For Startups Using A Sales Channel Partner. I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

Up and Running

DECEMBER 9, 2014

Bates: Good morning and welcome to our CEO panel, “How to Fine-Tune Your Small Business Finances From Funding to Growth” which I think is the direction that we would all like to be going. I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth.

Small Business 95

Small Business Finance Forecast Metrics 95

Berkonomics

AUGUST 10, 2023

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock. Draconian terms?

Liquidity Event 116

Liquidity Event Initial Public Offering Dividend Valuation 116

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. Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. First, it’s helpful to enumerate the startup’s funding history to date.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Austin Startup

JULY 6, 2018

Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Anti-Dilution. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print.

Dilution 48

Dilution Startup Technical Review Equity 48

Both Sides of the Table

SEPTEMBER 10, 2021

And the loosening of federal monetary policies, particularly in the US, has pushed more dollars into the venture ecosystems at every stage of financing. What Has Changed in Financing? even before the pandemic itself has been fully tamed. We have global opportunities from these trends but of course also big challenges.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

David Teten

JANUARY 19, 2021

Yes, via conversion rights at a valuation cap. Yes, via conversion rights at a valuation cap. As a result, unfounded hockey-stick graphs and unicorn promises give way to financial fluency, realistic expectations, frank conversations about what a business can credibly achieve, and transparency. . Flexible VC: Compensation-based.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

View from Seed

JULY 15, 2020

One topic of conversation among VC’s over the last few months is how their portfolios are faring during the Covid pandemic. Many of these companies are probably valued at their last financing round, which probably occurred in a very frothy funding environment.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Both Sides of the Table

FEBRUARY 19, 2019

This is often true when the action of the board could dramatically affect shareholders such as raising new capital, acquiring new businesses (that drain existing cash or dilute shareholders), selling the company or raising a lot of debt. hiring & firing the CEO. In many cases management teams confuse the roles and responsibilities.

Startup 204

Startup Dilution Government Stock Options 204

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. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Austin Startup

MARCH 26, 2019

These strategies can be useful in increasing initial conversions from your ads and website traffic, but offering large discounts too early in the life of the company will lower your gross margins and CAC, both of which will affect your unit economics and future financing conversations.

Technical Review 49

Technical Review Software Review China Acquisition 49

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. So how DOES a VC think about financings at early stages? It’s very simple. Size of my check.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

The Equity Kicker

MAY 14, 2012

Twice in the last week I found myself coaching founders on how to build a financing plan around value creation milestones so I thought I would share what I said here. Given that the valuation of a startup increases when milestones like these are hit it makes sense to build a financing plan based on when they are likely to come in.

Finance 118

Finance Valuation Venture Capital Dilution 118

Austin Startup

FEBRUARY 4, 2019

A finalist in the Social and Culture category , which will pitch at 11 am Saturday, March 9, EnrichHER Funding , based in Atlanta, is fueling the growth of women-led businesses by enabling women founders to secure capital in an affordable and non-dilutive way. What tech trend are you most excited about?

Startup 50

Startup Cofounder Technical Review Equity 50

Both Sides of the Table

JUNE 5, 2011

I have conversations with entrepreneurs and other VCs on a daily basis about fund raising, the prices of deals, how much companies should raise, etc. That’s the deal you get when you’re raising in a good market for startup financing. I thought I’d post on one of the topics before hand. That’s fine.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Hunter Walker

AUGUST 8, 2023

Satya and I were having lunch (yummy Chinese food) with our LPAC and the conversation turned to generally “how much more did venture portfolios have to fall before they found their true current value?” ” That is, for the class of funds institutional LPs tend to back, on average, where was bottom? Soft Acquisition Market.

Portfolio 98

Portfolio Cap Table LP Valuation 98

Hunter Walker

JANUARY 2, 2017

This keeps them aligned with their investors since a $250m exit with modest venture financing raised can be wonderful for all parties, but the same transaction can look awful if your last round was $60m on $300m pre! It could lower earnings because of continued investment and share dilution. Dollar Shave Club (as best I can figure was.5

Technical Review 115

Technical Review Cap Table Acquisition Startup 115

Up and Running

SEPTEMBER 20, 2021

The popularity of convertible notes is increasing in the world of startup financing, especially in seed-stage companies. Incoming investors make decisions based on the possible dilution of their investments on ownership and often find themselves surprised by overlooked convertible notes. One of these terms is the valuation cap, ie.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Hunter Walker

AUGUST 7, 2017

Employee options pools, typically created at the point of financings, shouldn’t be treated as haggling over dilution, but rather a strategic resource that will help founders build the best team and, by extension, a more valuable company.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. Consider convertible debt Before diving into a seed round, you may want to consider convertible debt over equity financing. I speak from experience.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Gust

OCTOBER 21, 2011

In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes. To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. Wouldn’t it be better to walk into a hiring conversation knowing that you can’t be outbid for the dream hire?

Dilution 104

Dilution Equity Hiring Partner 104

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

www.seriesseed.com

DECEMBER 9, 2012

Series Seed Financing Documents Blog.   That’s because there are not that many issues to negotiate in a simple equity financing. You can follow this conversation by subscribing to the comment feed for this post. Have you had anyone from Canada use these documents for financing a Canadian (Quebec) entity? 09/02/2010.

Term Sheet 40

Term Sheet Ratchet Dilution Equity 40

Startup Professionals Musings

SEPTEMBER 14, 2010

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Hunter Walker

SEPTEMBER 5, 2021

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. I’ll give you an example of a conversation I had with a current portfolio company just this week.

Cap Table 94

Cap Table Seed Stage Syndicate Syndication 94

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. What is a Convertible Note?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Seeing Both Sides

AUGUST 28, 2017

But once entrepreneurs have their initial team and product in place, a few smart advisors around the table and the social proof required to attract great talent, why would they raise additional dilutive equity capital if they can raise non-dilutive capital through the sale of tokens? Shift of value from equity holders to token holders.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Seeing Both Sides

AUGUST 28, 2017

But once entrepreneurs have their initial team and product in place, a few smart advisors around the table and the social proof required to attract great talent, why would they raise additional dilutive equity capital if they can raise non-dilutive capital through the sale of tokens? Shift of value from equity holders to token holders.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Scott Edward Walker

JUNE 9, 2019

Over the past few weeks, two of my clients have received financing term sheets in which the investors requested super pro rata rights. Simply put, pro rata rights permit the investor to maintain its percentage ownership in subsequent financing rounds. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Scott Edward Walker

JUNE 9, 2011

Conversion Rights What Are Conversion Rights? Indeed, preferred stock, as the name suggests, is preferable to (and more valuable than) common stock because it grants certain key rights to the holders, one of which is a conversion right. There are two types of conversion rights: optional and mandatory.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

OCTOBER 17, 2011

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Berkonomics

JUNE 15, 2017

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Austin Startup

MARCH 23, 2017

Digital ink has been spilled across the interwebs these past two weeks on the issues with different types of venture financings. Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. Which one is most appropriate though?

Dilution 54

Dilution Equity Warrant Distribution 54