View from Seed

MAY 2, 2019

There may be some twists and turns along the way, like a bridge or seed extension, but I think something like this is plan A for most founders. The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. But I’ve recently noticed a few common offshoots of this path that I’ve seen repeated a number of times.

Early Stage 214

Early Stage Dilution Valuation .Net 214

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

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 30, 2018

I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you. 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. is to start with just the data.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

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

MARCH 14, 2022

A business plan is drawn up to attract investors and partners. 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. 2) Laying out the genesis of the company. 3) Company formation.

Technical Review 141

Technical Review Due Diligence India Startup 141

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

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

The Next Web

NOVEMBER 20, 2013

George Deeb is the Managing Partner at Chicago-based Red Rocket Ventures , a startup consulting and financial advisory firm based in Chicago. If people are funding the business, they should get a premium because at the end of the day, cash funding founders are acting no different than a seed stage investor. Whose idea was it?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. is frequently granted ownership significantly less than that of the founders. However, at the very early stage, they are taking as much risk with their future as the founders. Engineer #1?

Engineer 129

Engineer Dilution Option Pool Vesting 129

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. Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. That’s true.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

YoungUpstarts

SEPTEMBER 16, 2015

by John Vrionis, partner at Lightspeed Venture Partners. What’s critical for entrepreneurs to understand is that valuations for startups do not increase at a linear rate; they increase geometrically based on achieving the right milestones. In addition, John is the founder of Lightspeed’s Summer Fellowship Program.

Valuation 100

Valuation Dilution Chicago Technical Review 100

Both Sides of the Table

SEPTEMBER 10, 2021

I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. On the one hand, you’re over paying for every investment and valuations aren’t rational. two founders in a garage?—?(HP

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

thinkspace.com

SEPTEMBER 7, 2012

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders. Should founders have anti-dilution rights?

Equity 62

Equity Employee Founder CTO Hire 62

David Teten

JANUARY 19, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. From RBI, Flexible VCs borrow the ability to reap meaningful returns without demanding founders build for an exit. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

View from Seed

DECEMBER 4, 2019

Over the last 10 years, we’ve been in a bull market with considerable froth in late stage financing activity and valuations. The trends described above in VC performance have an upstream effect on Limited Partners which is somewhat counter-intuitive. This would suggest that TVPI would be performing well. LP Constraints.

LP 256

LP IRR Distribution Portfolio 256

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically. That seems fair.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Berkonomics

AUGUST 10, 2023

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. There is no middle ground. Resetting your priorities Taking money from these sources involves resetting priorities over time.

Liquidity Event 116

Liquidity Event Initial Public Offering Dividend Valuation 116

Both Sides of the Table

SEPTEMBER 29, 2009

They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Should VC’s really be impacted by public market valuations when the money that they’re investing today should be for returns in 7-10 years? Short answer – yes.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Genuine VC

JULY 19, 2010

Micro VCs will continue to come in many flavors with slightly different strategies, but there are a few distinctive defining characteristics: On a per partner basis, each investor is investing less than $25M in any given fund. The capital deployment velocity is notably higher than a traditional 1-2 investment per partner per year.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Both Sides of the Table

FEBRUARY 25, 2010

We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. million at a $15 million pre-money valuation. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. We ended up agreeing a term sheet for $16.5

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

View from Seed

APRIL 30, 2015

What is it, and how should founders think about it? note: We’d like to be extra clear that founders should not take on venture debt if they don’t have 100% visibility into repaying the loan, as banks that need to recoup their loan my force the company or you as the guarantor into liquidation or bankruptcy.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Startup Professionals Musings

MARCH 23, 2014

Even though the class is common stock, Founders can negotiate special vesting and other terms as part of their stock restriction agreement upon venture investment. Here are some typical special terms and considerations for Founder’s stock: Negligible real value. Stock dilution control. Vesting with no cliff.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Rob Go

AUGUST 29, 2016

When I first started out as a VC nearly 9 years ago, most early stage company valuations were expressed as pre-money valuations. That is, the valuation of the company prior to the investment of new capital. Today, nearly all early stage term sheets I see are expressed as post-money valuations.

Post-Money Valuation 52

Post-Money Valuation Valuation Cap Table Term Sheet 52

Startup Professionals Musings

JANUARY 22, 2013

Even though the class is common stock, founders can negotiate special vesting and other terms as part of their stock restriction agreement upon venture investment. Here are some typical special terms and considerations for founder’s stock: Negligible real value. Stock dilution control. Vesting with no cliff.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Version One Ventures

FEBRUARY 6, 2019

This aggressive ownership target is one reason more and more founders are looking for capital from IT/tech VCs who don’t demand as much equity. Then, the revenue you earn from these partners/customers can cover your operating costs while you develop your own drug to bring to market – which is where the most value is captured in biotech.

Dilution 132

Dilution Artificial Inteligence IPO Valuation 132

betashop.com

OCTOBER 8, 2012

This past week while I was in Tokyo for meetings with potential partners for Fab, I was invited to participate in a panel discussion on startups. million registered users, 7500 supplier partners, 600 team members, and a run-rate of more than $150M in sales in just 15 months. Founders need to personally own something big themselves.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Gust

MARCH 16, 2014

Even though the class is common stock, Founders can negotiate special vesting and other terms as part of their stock restriction agreement upon venture investment. Here are some typical special terms and considerations for Founder’s stock: Negligible real value. Stock dilution control. Vesting with no cliff.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

The Equity Kicker

NOVEMBER 9, 2016

To be clear, liquidation preferences are sometimes used badly and founders should generally turn away from investors who ask for multiple liquidation preferences. Additionally, they introduce a small amount of complexity and an element of misalignment between the investor and the common stock holder (usually the founder).

Liquidation Preference 122

Liquidation Preference Silicon Valley Participating Preferred Common Stock 122

abovethecrowd.com

APRIL 20, 2016

One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. By January of 2016, that number had ballooned to 229.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.paulgraham.com

APRIL 28, 2010

I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. Another concept we need to introduce now is valuation.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

ReadWriteStart

JANUARY 27, 2011

And, oh by the way, we also really like the idea of the 1M/1M entrepreneurs building valuation and negotiating leverage through these business development efforts, instead of signing off large chunks of their company in form of equity early on. You can listen to the recording of today's roundtable here.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

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

Both Sides of the Table

APRIL 27, 2014

Co-founder discontent. Reference checking is to confirm or disprove a strong, positive intuition you already have about founders that could lead to an investment or a pass. What would this founder do if he got an offer to be acquihired quickly by Facebook? You have to deal with CEOs who resign. Health destroying stress.

Cofounder 374

Cofounder Syndicate Syndication Early Stage 374

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). If new investors get better rights in a future equity financings (such as registration rights, price-based anti-dilution, redemption rights, etc.), Anti-dilution protection.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

David Teten

NOVEMBER 17, 2011

Download the Startup Options Valuation model here. In particular, this model is designed to help all team members understand the impact of dilution on their options. Such a model is particularly helpful for those founders looking for a co-founder or key employee. I couldn’t find one online, so I built it.

Employee 155

Employee IRR Startup Mexico 155

This is going to be BIG.

MARCH 16, 2020

Part of it was that we had gotten over our skis on valuation, making further investment unattractive to both new and existing investors. Some key existings who didn’t want to see their prior money get lost wouldn’t budge on a dilutive financing, despite the fact that they knew where we were headed.

Bankruptcy 95

Bankruptcy Private Equity Seed Stage Dilution 95