Both Sides of the Table

JUNE 22, 2011

This was an audience of mostly first-time entrepreneurs. It is great for entrepreneurs and great for VCs. So here is what I have been telling entrepreneurs privately for the past 6 months. What a bubble means for each entrepreneur. New investors hate down rounds. I believe that. source: Capital IQ.

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Saudi Arabia Valuation IPO Technical Review 309

Berkonomics

AUGUST 3, 2023

When the need is high… For the rest of us, desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

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Venture Capital Liquidation Preference Valuation Term Sheet 417

Lightspeed Venture Partners

OCTOBER 7, 2012

As he said, “Great innovations solve problems or reduce costs. This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Startup Professionals Musings

MAY 20, 2016

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. I would summarize the views and qualms from professional investors as the following: Crowdfunding platform costs could trickle down to angel groups.

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Angel Groups Accredited Investor Equity Due Diligence 136

crowdSPRING Blog

MAY 10, 2013

The Start-up Hall of Shame (America’s 10 Worst States for Entrepreneurs) – [link]. The Damaging Psychology of Down Rounds | by Mark Suster – [link]. Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences – [link]. “Embrace skeptics.

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Social Media Small Business Design Media 93

NZ Entrepreneur

SEPTEMBER 16, 2020

For example, “How will unit cost affect our capital requirements and how will product pricing affect revenue?” Cost of goods sold (COGS). If a startup expects $1M in sales revenue but only gets $100k and they haven’t got a backup plan, they may face a down round or in the worst case liquidity concerns.

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Startup Sales Cycle Down Round Revenue 69

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

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Liquidation Preference Valuation Term Sheet Stock 153

Berkonomics

JUNE 8, 2017

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. It is for this group that we explore the implications implicit in raising money for growth.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Both Sides of the Table

FEBRUARY 4, 2016

In fact, 62% of VCs surveyed – across a wide variety of stages and geographies – said their portfolios were starting to cut costs, expected the markets to tighten. Most flat rounds. More down rounds. More structured rounds. And of course all of these factors are related.

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LP Valuation Burn Rate Pre-Money Valuation 150

Both Sides of the Table

FEBRUARY 8, 2016

The smartest companies in the market that I know are working aggressively to lower burn rates through pragmatic cost cutting knowing that the next fund-raising cycle may be unpleasant. I’ve heard enough companies say “we simply can’t cut costs or it will hurt the long-term potential of the business” to get a wry smile.

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Burn Rate Cap Table Balance Sheet Dilution 150

Both Sides of the Table

SEPTEMBER 27, 2010

These days that’s not the case and it’s a great outcome for entrepreneurs and for innovation. A: Only because it’s a nicer branding for entrepreneurs. I totally agree and have been arguing this to entrepreneurs for years. I always counsel young entrepreneurs to start on the local train.

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Liquidity Event Silicon Valley Seed Stage Finance 308

For Entrepreneurs

APRIL 7, 2011

Note: The concepts in this post will likely be obvious to experienced CEOs and entrepreneurs. Despite that, our experience indicates that entrepreneurs frequently make costly, avoidable mistakes [.].

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Finance Startup Cost Entrepreneur 167

Growthink Blog

MAY 23, 2011

An entrepreneur starts a company in classic " bootstrap " fashion - with a combination of sweat equity and their own financial resources. The angel then introduces the entrepreneur to his or her wealthy friends and business connections who, based on the good reputation of the referring angel, also invest. All live happily ever after.

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Angel Investor Venture Capital Sweat Equity Cram Down 112

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) Sales people cost money, and when they’re not bringing in revenue, their wandering in the woods is time consuming, cash-draining and demoralizing.

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Lean Silicon Valley Startup RSS 244

David Teten

AUGUST 7, 2019

Likely signs of a Momentum investment: the round is oversubscribed and the entrepreneur has more negotiating leverage than VCs during the closing process. . You could argue that when they were [raising] oversubscribed [VC rounds], Facebook, Google, Amazon, etc., were clearly Momentum, but [in hindsight] they were also Value.”

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Venture Capital Valuation Stock NDA 60

Tim Keane

SEPTEMBER 17, 2009

.  If the venture with these characteristics is worth investing in, the business is going to take longer and cost more to get to its milestone. Third, angels in particular have had unpleasant experiences with second rounds that are venture led where down-round terms are painful and expensive. Resources for startups.

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Wisconsin Valuation Angel Investor Startup 60

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. The press took notice, especially since just a few months later startups were laying off employees en-masse to cut costs. Sustainable growth: Prioritise sales efficiency over growth at all costs.

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Founder Startup Valuation Pre-Money Valuation 187

Berkonomics

JANUARY 20, 2010

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A Given that the Series Seed is issued at a fairly low valuation, anti-dilution protection is probably not that important, as a “down round&# from a low valuation in the Series Seed is unlikely.

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Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

FEBRUARY 14, 2016

I’d like to explain as best I can my opinion on what is going on because most of what I hear from entrepreneurs is not only wrong but is reminiscent of what I heard in 1997-2000. ” “This will be great for VCs and bad for entrepreneurs.” What is the True Sentiment of VCs? ” “Sure, prices are dropping.

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Valuation Down Round Startup Later Stage 150

abovethecrowd.com

APRIL 20, 2016

Many modern entrepreneurs have limited exposure to the notion of failure or layoffs because it has been so long since these things were common in the industry. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees.

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IPO Term Sheet Silicon Valley Valuation 40

Reid Hoffman

JUNE 8, 2021

The burden [should] just be that we care; that if we learn something, we improve it, and that we don’t only use single output metrics and its growth at all costs. And then how are some ideas for other entrepreneurs and other people thinking of doing it? And I said, I think it’s going to be a down round, because people are scared.

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Silicon Valley Hosting Rhode Island Design 69

Altgate

MARCH 8, 2009

I say ecosystem as opposed to industry because it is not just the VC funds themselves that are imploding, instead the collapse includes entrepreneurs and startups that were funded by VCs, angel investors, service providers like lawyers, bankers and accountants as well as limited partner investors in VC funds. So what to do?

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Later Stage Early Stage Venture Capital Portfolio 34

Reid Hoffman

JUNE 8, 2021

The burden [should] just be that we care; that if we learn something, we improve it, and that we don’t only use single output metrics and its growth at all costs. And then how are some ideas for other entrepreneurs and other people thinking of doing it? And I said, I think it’s going to be a down round, because people are scared.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

Both Sides of the Table

JUNE 5, 2016

In other words, it isn’t that VCs suddenly got smart, it’s that the costs of starting a company went down dramatically. But there are two major trends worth understanding that most VCs know by now and I suspect most entrepreneurs do not. Some examples There was an A-prime round of a high-profile deal coming together.

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Venture Capital Silicon Valley Burn Rate LP 150

www.quora.com

SEPTEMBER 22, 2011

The barrier between entrepreneur and money (incubators, angels, etc.) Connections seems to make the most sense with serial entrepreneurs (or someone who had prior success). Many startups these days are first-time entrepreneurs. The risk to the entrepreneur is that he loses several tens of millions of dollars in opportunity cost.

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Equity Employee Founder Cofounder 40

Scalable Startup

FEBRUARY 1, 2013

And that’s been reflected in the entrepreneurial community, where entrepreneurs, especially between 2000 and 2008, entrepreneurs really only wanted to do — for the most part wanted to do consumer software, because that’s the only software that they could actually get anybody to adopt. That’s the entrepreneur we are looking for.

Software Review 22

Software Review Startup Venture Capital Stock 22

Both Sides of the Table

OCTOBER 18, 2015

Or the influx of massive new amounts of entrepreneurs and wantrepreneurs seeking fortune and fame? ” In just two years the median round sizes for deals with mutual funds has more than tripled and the same phenomenon holds for hedge funds. This must be a boon for entrepreneurs of fast-growing tech firms – right?

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IPO Venture Capital LP SEC 150