Startup Professionals Musings

NOVEMBER 7, 2022

Even with advantages that independent startups can never hope to match, including brand recognition, customers, financial capital, and distribution, I don’t often see the entrepreneurial passion for innovation, agility, and team perseverance exhibited by new startups.

Advisory Board 359

Advisory Board Incubator Dilution Agile 359

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. But in a world of power-law distributions and the near magical scale enabled by software, the potential upside far outweighs the downside in most cases. In this case, the effective post-money is $2.5M / 2.5% = $100M.

IRR 205

IRR Dilution Founder Portfolio 205

Startup Professionals Musings

DECEMBER 11, 2022

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Marketing programs and distribution channels are required for even the best solutions, with an appropriate and viable rollout and growth strategy. Dysfunctional or non-functional team members.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. But in a world of power-law distributions and the near magical scale enabled by software, the potential upside far outweighs the downside in most cases. In this case, the effective post-money is $2.5M / 2.5% = $100M.

IRR 156

IRR Dilution Founder Portfolio 156

Both Sides of the Table

JULY 22, 2010

So taking the same fund raising round and assuming that the VC wants the options including before he or she funds (and before is totally standard) then the math works like this: Assuming a 15% option pool post funding then you need a 20% option pool pre funding (because the pool gets diluted by 25% also when the VC invests their money).

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

View from Seed

JULY 15, 2020

Other companies are great businesses, but are effectively encountering a dilution event. The business will ultimately emerge on the other end in good shape, but everyone will be more diluted as a result. Unevenly distributed, but broadly optimistic. But that remains to be seen. Some companies are sucking wind, some are thriving.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Feld Thoughts

SEPTEMBER 2, 2011

In this manner, you can see both the current equity distribution of the company, as well as historically what the equity holdings looked like. If the full pool were to be given out, the dilution is fairly significant to the founders.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. But in a world of power-law distributions and the near magical scale enabled by software, the potential upside far outweighs the downside in most cases. In this case, the effective post-money is $2.5M / 2.5% = $100M.

IRR 136

IRR Dilution Founder Portfolio 136

ReadWriteStart

JANUARY 13, 2024

In a progressively saturated market, these startups need to reevaluate their strategies and wisely distribute resources to remain competitive and sustainable amidst the demands of investors and well-established competitors.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Agile VC

OCTOBER 23, 2012

Startup outcomes are a power law distribution rather than a standard distribution. This impact of exceptional returns is diluted some at the fund level due to portfolio effect, so the distribution between the best and worst funds is far narrower than the distribution of startup outcomes.

LP 176

LP Accredited Investor Carried Interest Portfolio 176

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Startup Professionals Musings

MARCH 14, 2020

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Marketing programs and distribution channels are required for even the best solutions, with an appropriate and viable rollout and growth strategy. Dysfunctional or non-functional team members.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Both Sides of the Table

NOVEMBER 14, 2017

We realized that operating a business in distributed markets presented multi-city coordination efforts that we weren’t prepared for. were more distributed. The flawed assumptions are now kind of obvious but when you’re running at a thousand miles an hour it’s easy to miss some signs.

Operations 286

Operations New York City Technical Review Startup 286

Genuine VC

JULY 19, 2010

But leveraged distribution via platforms (organic/paid search, social networks, mobile devices) and self-service monetization (ad networks, app stores, payments) is what has truly empowered startups to become real scalable businesses on very small amounts of initial capital.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Startup Professionals Musings

OCTOBER 28, 2018

A popular myth these days is that finishing college only dilutes your entrepreneurial instincts, and the best of the best, including Bill Gates, Steve Jobs and Mark Zuckerberg, dropped out early to hasten their success. I agree with Robert E. Find summer internships and part-time work in your field of interest.

Chad 242

Chad Incubator Startup Dilution 242

A Smart Bear: Startups and Marketing for Geeks

FEBRUARY 26, 2019

Sometimes that’s defensible distribution channels. Find and focus on one reliable distribution mechanism before diluting your time diversifying. (HT Mike Maples Jr ) Corollary: A startup has to be so excellent at one or two key things, that they can screw up everything else up and not die.

Restful 202

Restful Founder Revenue Acquisition 202

VC Adventure

AUGUST 16, 2020

Yet others try to use cash to minimize dilution for early employees and try to rapidly reduce their reliance on options. Some feel that, especially for early employees, options should act as a reward for taking startup risk.

Programming 149

Programming Vesting Equity Software Review 149

ReadWriteStart

JULY 18, 2011

He says that one is too lonely, two is good and three is a great number if they can combine their skills to cover design, development and distribution. He believes that equity need not be distributed equally, as long as everyone involved is happy with their arrangement. How to Hack the Investment World.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Hunter Walker

JANUARY 2, 2017

Next Level: Buying Customers/Revenue/Distribution. It could lower earnings because of continued investment and share dilution. See Mint and Periscope as examples. There are so many reasons for a current Fortune 500 CEO to *not* bet the farm and make a big tech acquisition. It could go wrong and they’ll look stupid.

Technical Review 116

Technical Review Cap Table Acquisition Startup 116

Startup Professionals Musings

NOVEMBER 15, 2014

A popular myth these days is that finishing college only dilutes your entrepreneurial instincts, and the best of the best, including Bill Gates, Steve Jobs and Mark Zuckerberg, dropped out early to hasten their success. I agree with Robert E. Find summer internships and part-time work in your field of interest.

Chad 279

Chad Incubator Dilution LLC 279

The Startup Magazine

JULY 1, 2022

If you are providing a service, you will need to determine how to distribute your service and whether to offer it for free or charge for it. Equity financing can give you a lot of cash upfront, but it can also dilute your ownership stake in your company.

Technology 137

Technology Venture Capital Finance Startup 137

YoungUpstarts

OCTOBER 10, 2014

The amount you put toward debt minimizes reinvestment in growth and earnings distributions to owners. Financial Risk Distribution. Aside from paying your bills, you do not have to distribute profit to others. The more equity investment you use to develop the business, the more diluted your personal earning potential becomes.

Equity 176

Equity Limited Liability Company Vietnam Finance 176

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

The Next Web

SEPTEMBER 15, 2013

Most recently, the Netflix API team, which used to provide traditional REST APIs to the Netflix UI teams, is now providing content distribution platforms that enable data to be pushed from our AWS backend systems to the devices in people’s homes and pockets. More changes have since been made with the API.

API 135

API Audience Dividend Programming 135

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? That management team might have decided that they wanted to maintain more control of their company, didn’t want new board members and didn’t want to take dilution. The answer may not be known for many years.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

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

Up and Running

JUNE 14, 2012

So take this to pre-money level and assuming 50% dilution, it will be 12-20% (assume 16%) for the CEO and 4% for VP of Engineering. Deciding how many co-founders you need, who to bring aboard, and how to distribute equity all depend on your individual skills and the gaps you need filled. Conclusion.

Cofounder 90

Cofounder Technical Cofounder Accredited Investor Equity 90

Lightspeed Venture Partners

SEPTEMBER 21, 2013

With his back to the wall and about to run out of money, his first priority should have been runway extension, not dilution from new capital. pre money valuation seems big, the actual implication is only between 5% and 10% dilution since the round size is small. And although the headline difference between a $5.7M

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

Startup Professionals Musings

OCTOBER 15, 2016

A popular myth these days is that finishing college only dilutes your entrepreneurial instincts, and the best of the best, including Bill Gates, Steve Jobs and Mark Zuckerberg, dropped out early to hasten their success. I agree with Robert E. Find summer internships and part-time work in your field of interest.

Entrepreneur 120

Entrepreneur Chad Incubator Dilution 120

Both Sides of the Table

APRIL 21, 2013

Given the brand dilution going on with the name Sriracha how can he still grow his business? I wonder how agressive they are with digital distribution. He can’t trademark it since it’s the name of a city. By the way, he has never spent a dollar on advertising. Provide something distinctive. What will you be known for?

Vietnam 415

Vietnam Los Angeles Entrepreneur Thailand 415

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

David Teten

JANUARY 19, 2021

Flexible VC creates early liquidity which can be either reinvested or distributed to LPs. That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. . Early liquidity.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

ReadWriteStart

APRIL 4, 2023

Founders should consider other fundraising possibilities, such as traditional venture capital or angel investment, as well as non-dilutive funding sources such as grants or loans. It can serve as a centralized hub for distributing all of your most important information. Forgoing one is like throwing away money.

Startup 141

Startup Campaign Cofounder Venture Capital 141

Startup Professionals Musings

AUGUST 1, 2016

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Marketing programs and distribution channels are required for even the best solutions, with an appropriate and viable rollout and growth strategy. Dysfunctional or non-functional team members.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Austin Startup

MARCH 23, 2017

Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54