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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

I’ve decided to take all of my private conversations and subjective points-of-view on the topic and make them public in a keynote speech at the Founder Showcase in San Francisco on June 15th. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. Burn rate in case you don’t know is the amount of money a company is either spending (gross) or losing (net) per month. (it

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Startup Funding – A Comprehensive Guide for Entrepreneurs

ReadWriteStart

I have interacted with a lot of founders who funded their initial business expenses through credit cards. Point number 1: You must understand that funding is a business transaction between the investors and the startup founders. Raising higher capital at an early stage means more equity to be diluted to the investors.

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How to Talk About Valuation When a VC Asks

Both Sides of the Table

What was the post money on your last round (and how much capital have you raised)? It’s not uncommon for a VC to ask you how much capital you’ve raised and what the post-money valuation was on your last round. VCs hate “down rounds” and many don’t even like “flat rounds.” There are some simple reasons. After all?—?we

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VC Optimism Returning But More Pain Ahead In Their Portfolios

Hunter Walker

Restructures, Down Rounds, and Pay to Plays. Regardless, even in rounds with no punitive structure, the quickest way to underperformance as a fund is by increasing your ‘dilution before exit’ portfolio model assumptions by 1000-5000 basis points. Whatever gets reported is just the tip of the iceberg.

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Bad Notes on Venture Capital

Both Sides of the Table

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? A down round? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. We never thought about it.

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Take advantage of the good times to build stakeholder loyalty.

Berkonomics

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO. That one hurts early investors and founders more than perhaps any other action by investors.