View from Seed

MAY 2, 2019

The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. My experience is that YC partners tend to encourage founders to hold off on taking more money shortly after getting into YC, arguing that their value will increase significantly in just a few months. The Pre-YC Pre-Seed.

Early Stage 214

Early Stage Dilution Valuation .Net 214

View from Seed

OCTOBER 24, 2019

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. No good investor would want the founder/CEO of a company to have insufficient ownership by the series A, and every founder I know is sensitive to taking too much dilution.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

SEPTEMBER 10, 2018

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

View from Seed

JANUARY 13, 2021

And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. We’ve had multiple companies in our early funds that hit bumps and had to raise flat rounds, which hurts from a dilution standpoint but doesn’t wipe out our position. So yes, seed funds will own less. But guess what?

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

VC Cafe

FEBRUARY 27, 2024

To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples). That’s yet another reason for micro funds to move earlier in the fundraising timeline.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Both Sides of the Table

MAY 9, 2018

You race back to the office to tell everybody how well it went and you wait for the follow-up call to have a partners’ meeting or talk about term sheets or at least dip into due diligence. That way when my partners in are in …. there is a reason for us to re-engage because they never met that partner before. What do I do now?

Software Review 381

Software Review Churn Rate Due Diligence New York 381

Startup Professionals Musings

AUGUST 4, 2014

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

View from Seed

AUGUST 17, 2021

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. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 205

IRR Dilution Founder Portfolio 205

Startup Professionals Musings

SEPTEMBER 27, 2023

It’s disconcerting for most to realize that these shares are initially worth nothing, and the challenge is to get that value up as quickly as possible, without losing it just as quickly to investors, lazy partners, and taxation. This is called stock dilution control. Minimize your own loss of ownership as major investors contribute.

Stock 240

Stock .Net Vesting Founder Vesting 240

View from Seed

AUGUST 17, 2021

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. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 156

IRR Dilution Founder Portfolio 156

Startup Professionals Musings

APRIL 23, 2012

A startup is all about "execution" - meaning the equity should be allocated based on the value that each partner brings to the table in each of these dominant variables: Experience running a startup business. The next big challenge for a multi-partner startup is the allocation of roles. Who will be the CEO, CFO, and CTO?

Intellectual Property 252

Intellectual Property Equity Cofounder CTO Hire 252

Startup Professionals Musings

AUGUST 24, 2016

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Startup Professionals Musings

JANUARY 15, 2021

It’s disconcerting for most to realize that these shares are initially worth nothing, and the challenge is to get that value up as quickly as possible, without losing it just as quickly to investors, lazy partners, and taxation. This is called stock dilution control. Minimize your own loss of ownership as major investors contribute.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

David Teten

DECEMBER 2, 2019

I’m now researching non-dilutive funding for Action Tank , a startup I’m gestating to “Make America Functional Again”. I worked with outsourced research firm Wonder * to identify all of the institutions we could who support tech impact startups with cash and community, and in many cases without dilution. Three dot dash. Y Combinator.

Technical Review 60

Technical Review SBIR Dilution Silicon Valley 60

View from Seed

AUGUST 17, 2021

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. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 136

IRR Dilution Founder Portfolio 136

Startup Professionals Musings

JULY 31, 2012

The simple answer is to find a business partner, not an “implementer,” who already has the technical experience you need, and is willing and able to run that side of the business. If you are an entrepreneur, like Andrew Mason , CEO of Groupon, with a degree in music and no technical business partner to be found, your job is a bit harder.

Technical Review 230

Technical Review Technology Founder Management 230

The Startup Magazine

MARCH 14, 2022

A business plan is drawn up to attract investors and partners. The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. At this stage, the idea is pitched mainly to family and friends. 2) Laying out the genesis of the company. 3) Company formation. 4) Forming a company identity.

Technical Review 144

Technical Review Due Diligence India Startup 144

David Teten

JANUARY 21, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. Jonathan Bragdon , CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50-$300k in post-startup, post-revenue businesses planning to 2X revenues in 12-24 months. 20% initial ownership.

Equity 78

Equity Revenue Cofounder Colorado 78

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. percent to 3 percent range for engineer #1s.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Startup Professionals Musings

OCTOBER 17, 2022

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 342

Angel Investor Venture Capital Silicon Valley Portfolio 342

Startup Professionals Musings

NOVEMBER 8, 2010

A startup is all about "execution" - meaning the equity should be allocated based on the value that each partner brings to the table in each of these dominant variables: Experience running a startup business. The next big challenge for a multi-partner startup is the allocation of roles. Who will be the CEO, CFO, and CTO?

Equity 228

Equity Intellectual Property Cofounder CTO Hire 228

Up and Running

JULY 2, 2014

Picking the right attorney in your startup is as important as picking the right business partner. My business partner and I made many mistakes in our first tech startup, and so many of them were the result of choosing a lawyer who was a terrible fit. My business partner and I were elated. ownership and never dilute.

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Startup Professionals Musings

JANUARY 31, 2020

The simple solution I recommend to inventors is to find a partner who can focus on business and marketing, while you focus on technology. In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Two people with complementary skills are often equal to three.

Founder 312

Founder Intellectual Property Dilution Startup 312

Both Sides of the Table

MARCH 19, 2013

Channel Partners Not Yet Formed. I wrote about that extensively in “ the fallacy of channel partners.” That it is non-dilutive financing? Professional services + systems integration = lower churn. “You’re a software company not a services company! But while you’re early?

Technical Review 403

Technical Review Software Review Startup API 403

Startup Professionals Musings

SEPTEMBER 5, 2015

They don’t understand that most great entrepreneurs, including Bill Gates and Steve Jobs, had a partner with complementary skills on the business or technical side. In fact, I challenge anyone to name a famous inventor in recent times who also built a successful business without one or more partners on the business side.

Entrepreneur 120

Entrepreneur Dilution Partner Distribution 120

YoungUpstarts

SEPTEMBER 16, 2015

by John Vrionis, partner at Lightspeed Venture Partners. Raise too much capital at any given stage and suffer more dilution than is necessary – obviously not ideal. John Vrionis is a partner at Lightspeed Venture Partners who focuses primarily on early stage enterprise and consumer technology investments.

Valuation 100

Valuation Dilution Chicago Technical Review 100

David Teten

AUGUST 19, 2019

In 2019 we partnered with several revenue-based lending providers, effectively creating a marketplace. “. Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. The following information is based on companies funded by us and/or our capital partners: The average most recent monthly revenue is $331,229.

Revenue 60

Revenue Technical Review Software Review Equity 60

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. My recommendation to our lead partner looking at the deal, “Pass. It has awesome features that my main competitor doesn’t have. I can save tons of development time and I think I can buy it for all equity.

Merger 276

Merger Technical Review Early Stage Dilution 276

Startup Professionals Musings

OCTOBER 7, 2022

Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection. Despite all the hype you hear on attracting investors, more than 75 percent of startups are still self-funded, and avoid the hassle of dealing with partners and giving up a portion of the company.

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

ReadWriteStart

JANUARY 13, 2024

Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment. Equally important is establishing trust and credibility with customers, investors, and partners, as these relationships will be critical to their overall success and longevity in the industry.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

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. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. You can follow George on Twitter at @georgedeeb and @RedRocketVC.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Both Sides of the Table

AUGUST 14, 2017

Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. In fact, as one Twitter commenter observed to what do board do, “Often, not much.” That’s true. The administrative work we actually do at board meetings?

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Both Sides of the Table

FEBRUARY 20, 2019

just having a sparring partner with a vested interest in your success can be useful. The Limited Partners (LPs) who back funds don’t expect their dollars to be passive. For starters, the incoming CEO will demand between 4–6% of the company so shareholders will immediately face dilution. If you get a smart person on the board?—?just

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Startup Professionals Musings

MARCH 12, 2023

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members.

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Startup Professionals Musings

JANUARY 19, 2020

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 314

Angel Investor Venture Capital Silicon Valley Startup 314

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

Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. Old co-workers or new friends with complementary skills usually make the best partners. Should you start a company solo or find co-founders to help you? With one or more co-founders, you gain complementary skills, spread the workload and responsibilities, and reduce the risk.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325