The Good The Bad And The Ugly Of Funding From Friends

Startup Professionals Musings

That means writing down and signing the terms of the agreement, after making sure everyone understands them. 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.

The Damaging Psychology of Down Rounds

Both Sides of the Table

a) doing what is effectively a down round preemptively when I don’t have to, by underpricing my current round in this market vs. b) accepting the market price along with some risk of taking a down round in the future, if I don’t hit my milestones, why would I ever choose b)?”

How To Take Money From Friends And Still Be Friends

Startup Professionals Musings

That means writing down and signing the terms of the agreement, after making sure everyone understands them. New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge.

Founders Finding Funding From Friends May Be Fools

Startup Professionals Musings

That means writing down and signing the terms of the agreement, after making sure everyone understands them. New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge.

5 Ways to Make Your Startup a Choice Investment

Startup Professionals Musings

The single most important ingredient of success is not the idea, but having a team in place that has impeccable integrity, can iterate the product quickly, pivot the business model as necessary, and keep costs down in the process. People with money to invest have choices.

Don’t Hurt Friends and Family Investors Who Love You

Startup Professionals Musings

That means writing down and signing the terms of the agreement, after making sure everyone understands them. New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge.

A Year of Reckoning for Angels and Seed Funds

A Crowded Space

We expect there to be an increase in down rounds, flat rounds, inside rounds and various pay-to-play scenarios. These companies shut down. These shut downs are likely to happen when companies are funded solely by seed funds and angel investors that have not reserved significant capital for follow-on investments. A 5% equity stake could get cut down to 1%. Every single one of them had either a flat, down, or inside round during their history.

The Biggest Threats to My Business

Rob Go

Getting Crammed Down. If a), you reduce the cram-down risk, but also reduce the fund’s upside because you own less of your portfolio companies to begin with. I think it’s sometimes a good exercise for companies to take a step back and think about the big external threats to their businesses. This forces some level of intellectual honestly about one’s position in the market, and can push you to try to see around corners and respond.

Lean Startups aren't Cheap Startups

Steve Blank

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.)

Lean 260

Startup Fairy Tales and Other Tall Tales That Venture Capitalists Tell

Growthink Blog

This combo all too often leads to various forms of deal unpleasantness, like cram-down rounds, liquidation preferences, and change of control provisions, which in turn, often lead to unhappy founders and angel investors even in somewhat successful exits. The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1.

Does raising money mean you should start scaling?

The Next Web

Sometimes you’ll see that the lifetime value of your customers has gone way down because now you’re doing volume you’ve harvested all your ‘ideal’ early adopters. With the lower evaluation, all the initial investors and the founders will be crammed down and lose a good portion of their equity.

Nobody Gets Consumer in Boston

Rob Go

But overall, I think there is one major issue at work, and it does come down to the culture and high-brow intellectualism of this market. Angels don’t want to look stupid by having the large number of losses required to catch winners, or get crammed down by VCs investing big dollars ahead of them. VC’s don’t want to look stupid by investing in things too early, or trying to use capital as a weapon only to go down in flames.

Are Investors Being Unreasonable? - Startups and angels: Along the.

Tim Keane

"  The problem has been that too-high valuations and too generous terms have spawned painful down rounds that squash the entrepreneur and his early investors.    New money, usually VC money, comes in and crams down those early investors and takes substantial shares from the entrepreneur.    New money, usually VC money, comes in and crams down those early investors and takes substantial shares from the entrepreneur.