Both Sides of the Table

OCTOBER 12, 2014

And because they are so much larger by the time they go public (think: Facebook $104 billion, Twitter $18 billion, Alibaba > $200 billion) the private value of the most successful companies pre-IPO is more more valuable than it ever was. Why prorata rights are now sought out by LPs. Aren’t they getting screwed? That seems fair.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Feld Thoughts

MARCH 24, 2017

Lindel joined Foundry Group as a partner to lead the fund investing activity of Foundry Group Next. We’ve had the opportunity to work with Founder Collective’s partners – David Frankel, Eric Paley, and Micah Rosenbloom – over the years on several companies. It starts with the people.

Founder 75

Founder LP Technical Review Seed Stage 75

David Teten

JANUARY 19, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. Similar to the explosion of seed funds in the past decade, we (and some limited partners too ) believe these Flexible VCs are on the forefront of what will become a major segment of the venture ecosystem. Of the Inc. 5000 companies, only 6.5% return cap.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. So if you’re in year 8 of a 10-year fund and fund raising hasn’t gone so well, it’s no surprise that some partners will leave. Short answer – yes. and trying to raise their next fund.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Startup Professionals Musings

AUGUST 10, 2019

The downside is loss of control and financial dilution. Old co-workers or new friends with complementary skills usually make the best partners. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. The control and growth dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Both Sides of the Table

SEPTEMBER 10, 2021

In 2001 companies IPO’d very quickly if they were working, by 2011 IPOs had slowed down to the point that in 2013 Aileen Lee of Cowboy Ventures astutely called billion-dollar outcomes “unicorns.” each with partners as the lead. How little we all knew how ironic that term would become but has nonetheless endured.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Startup Professionals Musings

DECEMBER 27, 2014

They have too many highly paid partners, fat fees, an aging corporate infrastructure and difficulty raising money from institutions. As lifecycle investment partners, they have become weighted down with portfolios still recovering from the economic downturn. Super Angels are individuals or small teams using their own money.

Angel Investor 260

Angel Investor Silicon Valley Startup Portfolio 260

Version One Ventures

FEBRUARY 6, 2019

To make investments attractive, biotech founders also sell that the time to exit might be faster than in IT (it is true that successful therapeutics companies IPO or are acquired before launch) and that now, they can accelerate drug discovery with AI/machine learning (meaning, less time and thereby less capital is required).

Dilution 132

Dilution Artificial Inteligence IPO Valuation 132

Startup Professionals Musings

DECEMBER 14, 2014

The downside is loss of control and financial dilution. Old co-workers or new friends with complementary skills usually make the best partners. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. The control and growth dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

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. For example, look at the following graph.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Startup Professionals Musings

AUGUST 19, 2017

The downside is loss of control and financial dilution. Old co-workers or new friends with complementary skills usually make the best partners. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. The control and growth dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Agile VC

MAY 9, 2014

Such an approach is common in Silicon Valley… Google, Facebook, LinkedIn, and others have dual-class equity structures which give the holders of one class of shares (typically founders) disproportionate voting rights relative to their fully-diluted ownership stake in the company. Companies like Ford and the New York Times Co.

Government 153

Government Silicon Valley China Cofounder 153

Startup Professionals Musings

JULY 19, 2013

The downside is loss of control and financial dilution. Old co-workers or new friends with complementary skills usually make the best partners. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. The control and growth dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Startup Lessons Learned

JULY 5, 2010

Brant and Patrick undertook a difficult challenge: to provide a generally accessible introduction to Customer Development, without diluting its impact or dumbing-down its principles. But be philosophically consistent: periodically take the time to question your own expertise and that of your friends, partners and investors.

Customer Development 166

Customer Development Developer San Francisco Customer 166

Early Growth Financial Services

JUNE 26, 2014

Baze, Partner at Partech Ventures, Carlos Diaz, CEO at Kwarter, and EGFS’ Chief Strategy Officer Glenn McCrae covered raising funds, how-to pitch VCs, and potential sticking points around valuation. Pre-money valuation — The value of the company prior to investment, calculated on a fully-diluted basis.

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Common Stock 51

Austin Startup

NOVEMBER 25, 2018

My first day at Bazaarvoice was just a few weeks later, on May 2, 2005, and we built a company from inception to IPO on around $12m of capital use (out of the $24m we raised) in 7 years, creating over a thousand jobs and impacting clients all over the world?—?starting Below is a post I wrote on their Yahoo! Groups list on March 15, 2005.

Bootstrapping 48

Bootstrapping Austin Equity Cofounder 48

Babbling VC

OCTOBER 3, 2011

For those of you not in the know, they are one of the largest limited partners ( LP's : investors in venture capital funds) in Europe and are basically in almost all the funds throughout the market. If IPO's return, you basically will have two to three public markets you can sell into.

LP 82

LP Europe Germany Venture Capital 82

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

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. In a CTO Salary and Equity trends report by Safire Partners, it finds non-founder equity compensation to settle out below 2 percent. All of the estimates displayed above are figures prior to any dilution. Is there an IPO story here? N: exit size.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Agile VC

JULY 11, 2012

Some disgruntled younger partners left to go start a new firm in 1965 called Greylock. Some disgruntled younger partners left in the 90s to form what is now Redpoint Ventures (IT team) and Versant Ventures (healthcare team). Big success was Digital Equipment Corporation (DEC), in which ARD invested about $2.1M

Silicon Valley 240

Silicon Valley Carried Interest Cofounder Boston 240

Both Sides of the Table

MARCH 11, 2011

Secondly, they had an owned & operated (O&O) website – Google.com – and Overture had shut down GoTo.com at the request of their very profitable and large distribution partners. In 1995 Netscape IPO’d and browsers started to become more prevalent. Too many entrepreneurs focus on dilution.

Product 350

Product Tuvalu Dilution Incubator 350

Austin Startup

MARCH 7, 2021

These are all potential customers and strategic partners for startups. In 2019 and 2020, we saw hundreds of millions of dollars in non-dilutive funding go to Texas startups, most of which had never worked with the government before. More than 50 Fortune 500 companies are headquartered in Texas and six of the Fortune 50.

Texas 90

Texas San Antonio Houston Dallas 90

Seeing Both Sides

NOVEMBER 26, 2012

Whether you are raising a $250K seed round or navigating a $100M IPO, the capital markets - in all of its various forms - are a fundamental constituent in the business-building journey. You can take more risks on partner deals, focusing on long-term value creation, not short-term gain.

Balance Sheet 42

Balance Sheet Entrepreneur Dilution Portfolio 42

Ben's Blog

AUGUST 17, 2020

If an investor could have identified Salesforce’s ability to maintain such prolonged growth upfront, invested in its 2004 IPO, and then held on through to today, they could have made ~70x returns: equivalent to ~30% IRRs over a 16 year period. Not too shabby! Ultimately, determining a valuation is a delicate balance between many factors.

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

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

abovethecrowd.com

APRIL 20, 2016

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. In 1999, record valuations coexisted with record IPOs and shareholder liquidity. 2015 was the exact opposite.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.paulgraham.com

APRIL 28, 2010

In an IPO, it might not merely addexpense, but change the outcome. Those remedial actions can delay, stall or even kill the IPO. Of course the odds of any given startup doing an IPO are small.But not as small as they might seem. Whatkind of anti-dilution protection do they want? They just want to invest in this startup.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Version One Ventures

SEPTEMBER 12, 2017

It has 10 times the market cap of SNAP, the most prominent IPO of 2017. Then, if you win the deal, you have major influence on the development of the start-up through negotiated governance mechanisms like board seats, information rights, anti-dilution rights, etc. And so, we keep hearing how venture capital is about to be disrupted.

Venture Capital 164

Venture Capital LP Dilution Limited Partner 164

discuss.joelonsoftware.com

NOVEMBER 1, 2010

Make sure you treat people as partners, not as paid help. Equity partners need to have a hand in guiding the enterprise. Andrew Badera Thursday, October 09, 2008 Deleting … Approving … I quite agree, Andrew, that the equity partners need to have a hand in guiding the enterprise. The gist: 1. Go to user groups.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40

Reid Hoffman

JUNE 8, 2021

Greylock Partners · Brian Chesky | People-First Capitalism. Airbnb was preparing for an IPO right when the pandemic hit, and everything changed in a matter of days. So we have to think of ourselves as partners. And most companies have a partner, group and then society. I always saw it as the opposite.”.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Both Sides of the Table

MARCH 30, 2016

Many had started IPO’ing and we started to think about our future. 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 sales with some as high as 12x sales.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Professor VC

DECEMBER 8, 2015

I think we will see more of these in 2016 and beyond as IPOs are still far and few between and unicorns struggle to justify their stratospheric valuations. Obviously, Musk and Thiel both did fine off the eventual Paypal IPO (and even better subsequently with Facebook and Tesla). At the IPO, Musk held a 14.2%

Merger 28

Merger LP IPO Redemption 28

Reid Hoffman

JUNE 8, 2021

Greylock Partners · Brian Chesky | People-First Capitalism. Airbnb was preparing for an IPO right when the pandemic hit, and everything changed in a matter of days. So we have to think of ourselves as partners. And most companies have a partner, group and then society. I always saw it as the opposite.”.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

Ben's Blog

MAY 24, 2021

Editor’s Note: This testimony was delivered by a16z managing partner Scott Kupor to the U.S. IPO market. By way of background, I am the Managing Partner for Andreessen Horowitz, a $16.5 Second, the characteristics of IPO candidates have changed: fewer small companies are making it to the public markets.

SEC 36

SEC Accredited Investor IPO Technical Review 36

Seeing Both Sides

JANUARY 13, 2015

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. Also, customers are pushing us to provide a solution, not just a product, and so suddenly we need services and partners to round out our offering. Anyone up for a rewrite?

Mezzanine 20

Mezzanine IPO Finance Business Model 20