Both Sides of the Table

JUNE 17, 2017

Is the revenue dependent on a concentrated set of distribution partners or platforms that put future revenue at risk? They hired a biz dev team to work on deals where their product could be embedded in other people’s products as a way to increase customer demand. Stock option grants dilute your ownership in the company.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Startup Company Lawyer

MARCH 14, 2010

If new investors get better rights in a future equity financings (such as registration rights, price-based anti-dilution, redemption rights, etc.), The liquidation preference would not apply in this situation, and any distribution to stockholders would trigger the dividend preference. Anti-dilution protection. Future rights.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Lessons Learned

AUGUST 24, 2009

One is explaining the world as it used to work: the importance of gatekeepers, the scarcity implied by limited distribution, and the resulting quality bar that the industry is so proud of. Mostly it is the time and expense required to create the means of distribution for that industry. It’s just taking some longer than others.

San Francisco 113

San Francisco Lean Technical Review Distribution 113

Both Sides of the Table

MAY 30, 2018

Many VCs will have a distribution curve where they’ll do a small number of early-stage deals (say $1.5–3 If a VC prices a flat or down round it means that management teams are often taking too much dilution. If I assume 20–25% dilution that implies a price of between $20–28 million pre-money valuation ($25-$35m post-money).

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Lightspeed Venture Partners

NOVEMBER 19, 2012

The first 15,000 units sold out in six weeks in specialty retailers that distributed it in the Quantico area, and another 80,000 are being made now. But I think that given the demand, he could have held firm on valuation and either given up slightly less equity or taken in slightly more money for the same dilution.

Pre-Money Valuation 166

Pre-Money Valuation Alabama Valuation Churn Rate 166

Tim Keane

JANUARY 12, 2010

A liquidation preference means that the investors receive their investment back (plus dividends) prior to a distribution of the proceeds to stockholders. The investor may also ask for a participation in which the investors receive some additional multiple of their investment prior to distribution of proceeds to stockholders.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Lightspeed Venture Partners

OCTOBER 22, 2012

The founders have more demand than they know what to do with, and want to raise $55k for 5% equity in the company to buy a second truck. They have more demand than they can fulfill already. The founders focused too much on dilution and on Barbara’s clever ideas on a dimension (marketing) that was not critical to the business.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

ConversionXL

JANUARY 14, 2020

It’s more than just a distribution channel. Whether it improves the quality of an existing page (and, therefore, rankings for keywords you’re already addressing) or justifies new page creation (to rank for new keywords), there has to be demand. SEO is a pull channel, and search volume is indicative of demand.

SEO 159

SEO Framework SCRUM Search 159

The Equity Kicker

APRIL 13, 2012

We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands. These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute our governance structure.

Dilution 87

Dilution Stock Government SEC 87

Both Sides of the Table

MARCH 11, 2011

GoTo.com went on to ink huge distribution deals with Microsoft, AOL & Yahoo! Secondly, they had an owned & operated (O&O) website – Google.com – and Overture had shut down GoTo.com at the request of their very profitable and large distribution partners. Too many entrepreneurs focus on dilution.

Product 350

Product Tuvalu Dilution Incubator 350

Up and Running

APRIL 24, 2018

You and your team must know how to think about problems from new angles and adapt to changing market and customer demands. Health care ethics are the moral principles and values that allow you to make the right choice while promoting, distributing, and operating your product to healthcare organizations or patients directly.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

David Teten

SEPTEMBER 2, 2017

The presence of non-market terms may reflect difficulties in fundraising or the idiosyncratic demands of one or more LP’s. “The ‘back-story’ to these terms can give you valuable insight into the strength of the fund. – Protection against dilution when adding partners. – Tax distributions. – Tax distributions.

Private Equity 60

Private Equity Venture Capital Equity Partner 60

Reid Hoffman

AUGUST 17, 2021

All of these early-stage companies, you’re taking a risk on a bet; a bet of a future market, a bet on what demand will look like, a bet on how this will evolve. It’s a massive distribution advantage. They’re both fruit, but they’re very different in terms of how they operate. Hindsight is always 20/20.

Cofounder 69

Cofounder Differentiation Search Advertising 69

Reid Hoffman

AUGUST 17, 2021

All of these early-stage companies, you’re taking a risk on a bet; a bet of a future market, a bet on what demand will look like, a bet on how this will evolve. It’s a massive distribution advantage. They’re both fruit, but they’re very different in terms of how they operate. Hindsight is always 20/20.

Cofounder 69

Cofounder Differentiation Search Advertising 69

Lightspeed Venture Partners

SEPTEMBER 16, 2012

The founder wanted to take the offer, but he called his advisor (his business school professor) who told him it was too much dilution for this stage, so he turned it down. The founders clearly believed in the upside of the company and that is why they were willing to take a lower valuation but wanted minimal dilution.

Silicon Valley 167

Silicon Valley Salary Dilution Indiana 167

maplebutter.com

JANUARY 8, 2013

2) Co-Founders are the largest form of dilution (if you’re raising) 3) Everything around LeanStartup / Customer Development 4) Understand the micro economics of your business early. Then decide if you can build more value on either end of that process to demand a higher premium. Whats the best startup advice you’ve ever received?

Technical Review 44

Technical Review Startup Cofounder Software Review 44

abovethecrowd.com

APRIL 20, 2016

It will also minimize future dilution. I get that you want to grow and I want you to grow, but let’s internally finance that growth by spending gross margin dollars rather than new dilutive dollars of equity. Cash distributions are what matter at the end of the day, bug big paper gains still make for good fundraising pitches.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Startup Professionals Musings

APRIL 23, 2012

Building a product doesn’t get it distributed and sold. Providing the major funding source for an early-stage startup is a totally different dimension, but it usually trumps all the items above in demanding some equity. Expertise can be marketing, technical, financial, or sales. Pre-existing intellectual property.

Intellectual Property 252

Intellectual Property Equity Cofounder CTO Hire 252

Startup Professionals Musings

NOVEMBER 8, 2010

Building a product doesn’t get it distributed and sold. Providing the major funding source for an early-stage startup is a totally different dimension, but it usually trumps all the items above in demanding some equity. Expertise can be marketing, technical, financial, or sales. Pre-existing intellectual property.

Equity 228

Equity Intellectual Property Cofounder CTO Hire 228