View from Seed

JANUARY 13, 2021

The objection goes something like this: “yes, I can see rookie founders turning to you for a seed round. But won’t all good founders go to established firms that raise series A’s out of the gate?”. And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. But guess what?

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

Both Sides of the Table

SEPTEMBER 15, 2022

But it will be patiently deployed, waiting for a cohort of founders who aren’t artificially clinging to 2021 valuation metrics. Pitchbook estimates that there is about $290 billion of VC “overhang” (money waiting to be deployed into tech startups) in the US alone and that’s up more than 4x in just the past decade. What is a VC To Do?

Technical Review 416

Technical Review Pre-Money Valuation San Francisco Valuation 416

Both Sides of the Table

JULY 22, 2010

Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. Investors own 25%, the founders own 75%. The VC’s $1 million still buys them 25% of your company – it’s you who has diluted to 60% ownership rather than 75%.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

View from Seed

OCTOBER 24, 2019

As seed rounds have atomized, it’s not uncommon for founders to raise 3 or even 4 rounds prior to a series A. The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. Founders with limited experience.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

MAY 8, 2022

Most entrepreneurs struggle with many startup founders quandaries in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-founders to help you? The downside is loss of control and financial dilution.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

JUNE 28, 2021

It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. Thus every serious investor reserves a certain amount of his investment capital for follow-on rounds, which allows them to stay to course to success, even with dilution. All startups always need more money.

Angel Investor 361

Angel Investor Accredited Investor IRR Angel Groups 361

The Next Web

NOVEMBER 20, 2013

With all other things equal, that means that a 50/50 split between two co-founders (evenly split if there are more than two), or a 66/33 split based on the premium for coming up with the original idea, and for starting the initial development efforts and sourcing the original team. Whose idea was it? How important is this person’s role?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Feld Thoughts

MARCH 24, 2017

Foundry Group is best known for our investments in startups, but our vehicle currently investing in other venture funds, Foundry Group Next, is off to what we believe to be a great start and I wanted to share an update about it by talking about our new investment in a fund managed by Founder Collective.

Founder 75

Founder LP Technical Review Seed Stage 75

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 205

IRR Dilution Founder Portfolio 205

Startup Professionals Musings

SEPTEMBER 27, 2023

Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. Key founder vesting should have no cliff. This is called stock dilution control.

Stock 240

Stock .Net Vesting Founder Vesting 240

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. The Founder of a company starts by owning all the shares representing ownership of the company. Therefore, to avoid dilution to its existing equity holders, all a company has to do is not hire any more employees who get options, or take any more money from investors.

Dilution 150

Dilution Equity Vesting Stock Options 150

Startup Professionals Musings

JANUARY 31, 2020

In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Good entrepreneurs are often diluted in their potential by trying to attack too many new market opportunities or customer requests concurrently. Certainly interfacing to the outside world may not be an inventor forte.

Founder 312

Founder Intellectual Property Dilution Startup 312

SoCal CTO

SEPTEMBER 27, 2011

Founders vs. Early Employees To help with this discussion, let me start with a definition of "early employee." The first few people into a startup are on a spectrum of founder vs. early employee. Founders are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept.

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 156

IRR Dilution Founder Portfolio 156

Both Sides of the Table

MAY 9, 2018

I left the meeting and had to attend a 3-hour board meeting where two founders have been fighting and each want the other one fired. But your co-founder had been senior at one of the big enterprise software companies and if I remember correctly American Express had run a big pilot with you. Some were interesting, some weren’t.

Software Review 381

Software Review Churn Rate Due Diligence New York 381

Both Sides of the Table

MAY 28, 2018

There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. Founder: “$8–10 million” VC: “What’s your current burn rate?” Founder: “$250k / month.” Founder: “Um. Why are you raising so much?” Let me check my plan.”

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Startup Professionals Musings

JANUARY 15, 2021

Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. Key founder vesting should have no cliff. This is called stock dilution control.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Startup Professionals Musings

AUGUST 24, 2016

I always tell entrepreneurs that two heads are better than one, so the first task in many startups is finding a co-founder or two. Giving a co-founder a salary won’t get you the “fire in the belly” you want. Each co-founder should get equity for value, based on these key variables: Lived a key role in a previous startup.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 136

IRR Dilution Founder Portfolio 136

The Startup Magazine

OCTOBER 9, 2017

But that will dilute your focus, time and energy and mean you have less time you to drive the business forward and expand. The post Navigating the Tricky World of ‘Experts’ – Start Up Advice from Founder of MyArtBroker appeared first on The Startup Magazine. It’s easy to fall into the trap of doing everything yourself.

Founder 68

Founder Dilution Web Development SEO 68

This is going to be BIG.

JANUARY 18, 2024

Some of these folks are founders and CEOs, but not at high-growth tech startups. Helpful investors should use their sage advice and support of the founder to make them into better, data-driven decision makers to impact a company, instead of relying on their contractually held voting rights. Perhaps they inherited it.

.Net 88

.Net Cap Table Startup Technical Review 88

Both Sides of the Table

FEBRUARY 6, 2013

Quick summary: Be careful not to have too many co-founders. it’s the most expensive dilution you’ll ever face. I don’t think VCs care as much about co-founders & economics as people think. And you need to be careful about giving up control to cofounders as much as VCs. For the wrong reasons.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. That’s the concept of what some call mathematical dilution. That is not economic dilution, but rather its opposite ( accretion ).

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Both Sides of the Table

AUGUST 14, 2017

I read commentary or Twitter or blogs and realize that there are also strongly held convictions that there are these evil VCs who do terrible things to mostly altruistic founders. But unlike the popular press reporting of this conflict — 80% of the time it is founder-to-founder conflict and not investor-to-founder conflict.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

The Startup Magazine

MARCH 14, 2022

At this stage, the founder mainly raises funding from their sources or family and friends. The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. The right amount of funding is needed for the idea to be nurtured. 2) Seed funding. 3) Series A, B, C funding.

Technical Review 144

Technical Review Due Diligence India Startup 144

ReadWriteStart

OCTOBER 28, 2010

Do More Faster: TechStars Lessons to Accelerate Your Startup is the new book by David Cohen , founder and CEO of TechStars, and Brad Feld , managing director of Foundry Group. Below is his chapter, Avoid Co-Founder Conflict. A perennial favorite is to decide that each founder should own an equal share. Can any of us be fired?

Cofounder 128

Cofounder Founder Equity Dilution 128

ithacaVC

OCTOBER 10, 2017

Here is the big problem with investors – they dilute the founders’ ownership in the company. Let’s cover some basics: It is impossible to issue stock to investors without existing shareholders (founders, employees and prior investors) being diluted. Are the founders happy?

Dilution 53

Dilution Stock Options Stock Valuation 53

Both Sides of the Table

FEBRUARY 20, 2019

One of the things that founders have the most angst about is whom they should have on their board and at what stage of the business. Why you should set up a board at the seed round of funding I know these days with SAFE documents and rolling convertible notes many founders prefer not to set up a board early on.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

YoungUpstarts

JULY 31, 2019

by Anish Sebastian and Juan Pablo Segura, co-founders of Babyscripts. Founders need seed capital to get their operations up and running, and to begin generating revenue. When founders are wrong (which happens often), that initial seed round runs out quickly, requiring another round of funding — typically referred to as a bridge round.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

Gust

OCTOBER 17, 2022

Between COVID, the evolution of the API economy, and a increase in second, third & fourth time founders who are seeking funding. Janelle van Deventer breaks down the options for raising capital through bootstrapping, dilutive investors, government subsides and various forms of debt.

Dilution 184

Dilution API Bootstrapping Government 184

View from Seed

DECEMBER 4, 2014

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Feld Thoughts

SEPTEMBER 12, 2018

First, Felicis Ventures is committing 1% on top of every check the firm writes in non-dilutive capital earmarked for “founder development” in coaching and mental health. ” Next, Mahendra Ramsinghani has a long article in Techcrunch titled Investors are waking up to the emotional struggle of startup founders.

Founder 116

Founder Cofounder Dilution Email 116

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

Startup Professionals Musings

AUGUST 31, 2018

Most of you new venture founders I meet as an angel investor seem convinced that starting the business is the hardest part. Totally new and risky products will dilute your focus, and may confuse existing customers. Unfortunately, sustainability is proving to be a more and more complex challenge in this era of rapid change.

Angel Investor 167

Angel Investor Dilution Software Review Distribution 167

Both Sides of the Table

MAY 9, 2011

I covered what I call “the co-founder mythology.&# Either you’re not technical and you think you need a technical co-founder or vice-versa. Conventional wisdom says that you gain far more in working as a team than you lose by diluted by half before you start. Hire your co-founder. Vested over 4 years.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

YoungUpstarts

SEPTEMBER 23, 2017

I raised money and traded equity, but with my venture, I had to make one of the toughest decisions, to build it with some assistance of co-founders. Find the right co-founders. Having co-founders provides a strategy to avoid funding your start-up, with the help of investor’s money. Often, this is considered as a mistake.

Cofounder 124

Cofounder Sweat Equity Equity Dilution 124

Feld Thoughts

SEPTEMBER 2, 2011

The founders each have common shares that will vest over four years. The vesting schedule protects each of the co-founders in case one gets hit by a bus or decides to drop the project after a short period of time. Bring Praveena in as a founder and offer 10-20% of the company as stock. Time to update the cap table.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133