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Cram Down – A Test of Character for VCs and Founders

Steve Blank

Cram downs are back – and I’m keeping a list. Except, that is, for the bottom feeders of the Venture Capital business – investors who “ cram down ” their companies. A cram down is different than a down round. Cram downs wouldn’t exist without the founder’s agreement. Stopping Cram Downs.

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5 Ways to Make Your Startup a Choice Investment

Startup Professionals Musings

No VC or Angel investors I know are interested in a bunch of angry, crammed-down small investors as co-shareholders. When legal, it may be an alternative if you only need a small amount (less than $100,000), and don’t ever plan to come back for more.

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6 Keys To Managing Funding From People Close To You

Startup Professionals Musings

New money from professional investors sees no value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge. A second harsh reality for entrepreneurs is the realization of how little power you have to protect the position of these early investors.

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Want to Know How First Round Capital was Started?

Both Sides of the Table

He also says it is important to be able to participate in follow on rounds so as not to get “crammed down”. Howard states the most successful angel investors are the ones who can place many small bets, increasing the possibility of hitting a home run. First Round Capital makes 20-25 investments a year with an average size of $500k.

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The Damaging Psychology of Down Rounds

Both Sides of the Table

Many VCs would prefer to avoid having to cram down other VCs by investing at a lower price or even if it’s not a cram down they prefer not to invest in a down round that forces the VC to take a “write down” on their valuation sheets they should their LPs.

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The Pros and Cons of Filing Business Bankruptcy

The Startup Magazine

Chapter 13 can be used by sole proprietors, one-person corporations, and certain LLCs in some states to repay some debt, “cram down” any assets that are subject to loans and otherwise reorganize their business under a three- to five- year repayment plan. The value of assets can be “crammed down” to market value; debtor pays less.

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The Good The Bad And The Ugly Of Funding From Friends

Startup Professionals Musings

New money from professional investors sees no value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge. A second harsh reality for entrepreneurs is the realization of how little power you have to protect the position of these early investors.

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