Both Sides of the Table

OCTOBER 12, 2014

In the old days there weren’t many fights about whether angels would take their prorata rights in financing rounds. People all across the value chain have taken notice including Limited Partners who are the people who invest in VC funds in the first place. Thus begins the dance. Why prorata rights are now sought out by LPs.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Austin Startup

JULY 6, 2018

Ask the Users Startup Accelerators: Bundled and Unbundled Over the past several years, accelerators have emerged as a powerful filtering and signaling mechanism in early-stage startup ecosystems, allowing high-potential young startups to connect with investors, advisors, and other strategic partners far faster and more efficiently than before.

Dilution 48

Dilution Startup Technical Review Equity 48

Both Sides of the Table

SEPTEMBER 10, 2021

And the loosening of federal monetary policies, particularly in the US, has pushed more dollars into the venture ecosystems at every stage of financing. What Has Changed in Financing? each with partners as the lead. even before the pandemic itself has been fully tamed. how on Earth could the venture capital market stand still?

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Financing A Small Business. Personal Finance. Before Roving Software could receive its first round of financing from professional investors, in early 1999, he had to put all the stock arrangements in writing. Start-up | Mondays. Technology | Thursdays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. The right partner goes to bat for you during the recruiting process—helps you identify and court the hires that you look back at as key to your success.

Dilution 104

Dilution Equity Hiring Partner 104

Both Sides of the Table

SEPTEMBER 29, 2009

The professor plotted data and showed us statistically that most people buy stocks when they are booming (e.g. A good piece covering the contracting VC market is by Bill Gurley So partners at many firms are racing around to the limited number of pension funds, endowments, insurance companies, family offices, etc.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Austin Startup

MARCH 26, 2019

These strategies can be useful in increasing initial conversions from your ads and website traffic, but offering large discounts too early in the life of the company will lower your gross margins and CAC, both of which will affect your unit economics and future financing conversations. These add up very quickly.

Technical Review 49

Technical Review Software Review China Acquisition 49

Berkonomics

JULY 16, 2020

Venture or angel-financed companies with plenty of working capital sometimes are immune to this working capital need for some time into their growth, but at some point, it will become clear that the cheapest form of finance is not equity in a growing enterprise. Back to loans costing less than dilution of equity.

Covenant 62

Covenant Dilution Warrant Intellectual Property 62

Berkonomics

JUNE 15, 2017

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Ben's Blog

MAY 24, 2021

Editor’s Note: This testimony was delivered by a16z managing partner Scott Kupor to the U.S. By way of background, I am the Managing Partner for Andreessen Horowitz, a $16.5 For the direct listings completed to date, the stocks have traded in the first day in the range of 15-23% of the total shares outstanding. IPO market.

SEC 36

SEC Accredited Investor IPO Technical Review 36

The Next Web

MARCH 2, 2014

Instead, honestly analyze the company’s business plan and finances to determine whether the business needs to secure outside funding in order to achieve its objectives, and if so, how much. Should we finance with debt or equity? Is this someone you really want to partner with? Take your time.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

www.mattbartus.com

SEPTEMBER 24, 2011

I can’t tell you how often a client calls me up and says something like this: “Matt, we have this great new consultant who is going to make introductions to us to [pick type of business partner]. We will grant him/her X% fully diluted shares up front, and every time he/she makes an introduction, he/she will vest in 100 shares.”

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. The same thing happened to many Internet stocks.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Startup Lessons Learned

JUNE 19, 2019

Previously, on the venture side you wanted to invest as early as possible, because the first round of financing got you to a product, and then you'd get beta-type customers, and then you'd raise a second round at a much higher price, and the business could immediately take off from there. I was the second partner to opt out.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

Both Sides of the Table

MARCH 30, 2016

Mark dutifully went to partner meetings, back-channel references began, firms started calling existing VCs to “test prices” and we started debating whom our best partner would be. forward revenue for public comps (comparable stocks). Great companies get financed. FOMO was NOMO. As in no more.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Berkonomics

AUGUST 21, 2013

Venture or angel-financed companies with plenty of working capital sometimes are immune to this need for some time into their growth, but at some point it will become clear that the cheapest form of finance is not equity in a growing enterprise.

Covenant 61

Covenant Warrant Dilution Intellectual Property 61

Startup Company Lawyer

MAY 4, 2009

If a founder’s company raises more than $50,000 in debt or equity financing, excluding funds from the founder, within 18 months of formation, then the founder must pay a tuition fee of $4,500, which is used to cover the Institute’s expenses in providing the program. Exit Strategies. July 28th, 2009: Build a value generation plan.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

www.instigatorblog.com

OCTOBER 23, 2010

The more that those first employees feel like founders in terms of their ownership, emotional attachment, responsibility and overall understanding of the startup process (including financing , running day-to-day activities, etc.) 1% is even less after you factor in dilution. 1% is even less after you factor in dilution.

Equity 41

Equity Employee Startup Vesting 41

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario. But pass they will.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

venturehacks.com

OCTOBER 21, 2010

You explain that the company currently has 6M shares outstanding so the investors must be valuing the company’s stock at $1.33/share: Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&#

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Berkonomics

JANUARY 27, 2010

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

Professor VC

DECEMBER 8, 2015

Not surprisingly, the merger was highly dilutive, particularly to Confinity/PayPal shareholders. I was a Limited Partner in Angel Investors II (Ron Conway's angel fund) that was an investor in Confinity. Like CPF, Kilowatt also provides solar financing services to consumers. At the IPO, Musk held a 14.2%

Merger 28

Merger LP IPO Redemption 28

Scott Edward Walker

AUGUST 31, 2011

How should the founders divide the initial stock ownership? Which financing sources should they consider? Because this is only a $725K investment, a good lawyer will recommend structuring the investment as a convertible note or a “Series Seed” financing , rather than a full-blown Series A. At what valuation and on what terms?

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

Scott Edward Walker

SEPTEMBER 21, 2011

David Hornik , a partner at August Capital and a very smart investor, confirms this approach in his interview on Sprouter : So if you are new to the area or to entrepreneurship, how do you get the right. This approach will keep the financing relatively simple and inexpensive and will defer the company’s valuation (i.e.,

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45

Both Sides of the Table

FEBRUARY 14, 2016

Many experienced partners are funds have 7-10 boards and most of these will need more capital. I wonder whether LinkedIn’s stock market plunge in January 2016 might have a similar effect (to a lesser magnitude because the underlying company is still great). Why Financing in Falling Markets is So Damn Difficult.

Valuation 150

Valuation Down Round Startup Later Stage 150

VC Adventure

AUGUST 30, 2010

Preferred equity is stock which carries with it certain rights (preferences) in terms of how and when it gets paid back and a handful of other items that relate to the control of the underlying business. Historically convertible debt has been easier (and therefore cheaper) to put in place.

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

www.mattbartus.com

DECEMBER 9, 2012

If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Professor VC

JULY 25, 2013

In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc. Well, those 3 weeks came and went, and they decided they weren''t sure about the market and needed to get other partners in the firm on board.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

thestartuplawyer.com

FEBRUARY 24, 2010

About the Author Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. He obviously never launched a startup and got shafted by a co-founder. Click here to learn more about his practice.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Professor VC

JANUARY 17, 2008

A partner from the law firm (sponsor, covers the drinks and food) tosses out some softball questions to the panelists, the audience chimes in with Q&A and finally, culminates with the meet and greet where the panelists are flooded with business cards and pitches on the next great thing, which is often very similar to the last great thing.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

aweissman.com

JANUARY 30, 2010

There is an amazing wealth of innovation around early stage venture financing, most of which developed in just the past few years. Josh Kopelman writes that the fund will: "allow First Round Capital entrepreneurs to contribute a small piece of the stock they own in their company -- and share in the upside of all the other companies."

Early Stage 46

Early Stage Entrepreneur Cofounder Framework 46

blog.simeonov.com

FEBRUARY 22, 2010

Most partners, be they lawyers or VCs, tend to tweak the standard with their own language. The number of separate documents may vary but they fall into two categories: Those related to equity, typically a restricted stock purchase agreement (RSPA) and associated escrow and other agreements. more details ].

Founder 44

Founder Vesting Agile Startup 44

maplebutter.com

JANUARY 8, 2013

What is the best advice you can give for finding a business partner? Don’t quickly choose any business partner. The key is to ask the right people what they think – not your friends, parents or partner. If you believe in it – then finance whatever you can yourself. Initial developer: partner or hired? 1) Hire A’s.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

Seeing Both Sides

JANUARY 13, 2015

Financing: holy crap - we are running out of money in 6 months! The founders are getting restless because they have been diluted, have less responsibility and realize that the company isn''t going to reach $1 billion in 3 years. Financing: The "hopes and dreams" financing stage is over. Is it time to consider an exit?

Mezzanine 20

Mezzanine IPO Finance Business Model 20