Both Sides of the Table
SEPTEMBER 28, 2014
Conversely if you’re burning $600,000 per month (yes, some companies do) then you only have 5 months of cash left. but that’s our firm’s money on your balance sheet. We want money to make some acquisitions (investors would prefer to fund M&A if they know specific deals – not to encourage bad behavior.
Both Sides of the Table
JUNE 5, 2011
I wrote this because over the last decade I’ve seen a destructive cycle where otherwise interesting companies have been screwed by raising too much money at too high of prices and gotten caught in a trap when the markets correct and they got ahead of themselves. I thought I’d post on one of the topics before hand.
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Both Sides of the Table
FEBRUARY 15, 2016
How much your company should burn should also have a direct correlation with whom your existing investors are and I strongly advise that you have open conversations with them about their comfort levels and also the level of support you are likely to receive going forward. In fact, most entrepreneurs I know don’t ask – why is that?
Both Sides of the Table
MAY 30, 2018
What was the post money on your last round (and how much capital have you raised)? It’s not uncommon for a VC to ask you how much capital you’ve raised and what the post-money valuation was on your last round. Many VCs will have a distribution curve where they’ll do a small number of early-stage deals (say $1.5–3
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. It’s worth reading his post to understand the problem. It’s very simple.
Both Sides of the Table
SEPTEMBER 18, 2014
If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. These are all real conversations. Him: Not so good. Obviously he’d be pissed off.
Agile VC
DECEMBER 6, 2012
Of course a VC firm that has stellar performance will often attract new LPs interested in investing, or conversely one that performs poorly will have existing LPs drop out. Well at this juncture Startup X’s valuation is presumably a lot higher than it was at the Series A, maybe even 5-10x+ higher.
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