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What Do I Do If My Business Runs Out Of Cash?

YoungUpstarts

The fast options to get business cash are: Collecting from customers. Each of these options has negative ramifications – bad customer experience, personal financial strain, and high-interest rates, respectively speaking. Customers not paying invoices. If you answered “no” to #2, you need to scramble to get cash in time for #3.

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Mark Hauser’s Hauser Private Equity Spearheads Major Deals in Industrial Sector

The Startup Magazine

Their investment supported Stat Health’s recapitalization, alongside Spanos Barber Jesse & Co. They have executed a number of co-investments with Shore Capital Partners, including a partnership with Innovative Packaging Company, a custom packaging solutions provider operating out of Vancouver, Washington.

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Cram Down – A Test of Character for VCs and Founders

Steve Blank

But then there’s one more thing – to make it easier for you and a few key employees to swallow the cram down – they promise that you’ll get made whole again (by issuing you new stock) in the newly recapitalized company. All of a sudden the deal which seemed unpalatable is now sounding reasonable.

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What Just Happened With OnLive?

Feld Thoughts

The news is coming out that it has a new owner, that many of the employees have already been offered jobs post ABC, and that the service will continue to operate and customers won’t be negatively impacted. OnLive looks to me like the second case. The founders equity, the investors equity, and the employees equity.

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Survivors

Both Sides of the Table

I worked with a founder who advocated for a product pivot and then shut it down right after launch because customers didn’t immediately sign up. You find out those that have the fortitude to work out a new way forward, who can handle recapitalizations or downsizing or shutting down business lines or hiring whole new teams.

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Startup Founder Agreements

blog.simeonov.com

The only way to remove their equity holding in the cap table is by buying them out or through a recapitalization of the company. Sometimes, the vesting is milestone-based (upon the close of a financing) or performance-based (signing up customers, doing deals, recruiting). Advisors tend to have 100% acceleration on change of control.

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The Silliness Of Recapping Seed Rounds

Feld Thoughts

The feedback is “come back when you’ve made more progress with customers.” So they recapitalize the company. The first release is underwhelming, but they iterate aggressively, with feedback and support from some of their angel investors. The product gets a lot better. ” They are running out of money.