Startup Professionals Musings

JUNE 28, 2021

Entrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). Thus investing in startups should always be approached as a low odds game.

Angel Investor 361

Angel Investor Accredited Investor IRR Angel Groups 361

Both Sides of the Table

FEBRUARY 6, 2013

Final startup grind from msuster. And the folks at Startup Grind have been kind enough to invite me to present this morning in Mountain View on the topic. it’s the most expensive dilution you’ll ever face. PMs are a vital part of a tech startup. And what your views / tips for early-stage startup teams are.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Startup Professionals Musings

SEPTEMBER 10, 2018

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. The default answer, to keep peace in the family, is to split everything equally, but that’s a terrible answer, since now no one is in control, and startups need a clear leader. Now comes the reality check.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

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. The default answer, to keep peace in the family, is to split everything equally, but that’s a terrible answer, since now no one is in control, and startups need a clear leader. Now comes the reality check.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Startup Professionals Musings

DECEMBER 16, 2017

Entrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). Thus investing in startups should always be approached as a low odds game.

Angel Investor 190

Angel Investor Accredited Investor IRR Angel Groups 190

This is going to be BIG.

JANUARY 18, 2024

These are people that didn’t make their money through a tech startup or startup investing. Some of these folks are founders and CEOs, but not at high-growth tech startups. They might not understand how a pre-revenue startup could be worth anything, let alone be valued at $5mm. Perhaps they inherited it.

.Net 88

.Net Cap Table Startup Technical Review 88

Both Sides of the Table

MARCH 19, 2013

The era of VCs investing in successful consumer Internet startups such as eBay led to a belief system that seemed to permeate many enterprise software startups that hiring sales or implementation people was a bad thing. If you’re an early-stage enterprise startup services revenue is exactly what you need. We like software.

Technical Review 403

Technical Review Software Review Startup API 403

Both Sides of the Table

SEPTEMBER 15, 2022

At our mid-year offsite our partnership at Upfront Ventures was discussing what the future of venture capital and the startup ecosystem looked like. 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.

Technical Review 416

Technical Review Pre-Money Valuation San Francisco Valuation 416

ReadWriteStart

JUNE 1, 2020

I have often been asked about Startup Funding by entrepreneurs. Many myths surround the subject of startup funding. Here is Startup Funding, a Comprehensive Guide for Entrepreneurs. You must have seen a lot of startups giving out promotions, discounts, and incentives at the early phase of their business. Debt investors.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

View from Seed

JANUARY 13, 2021

What has happened is that over the last 10 years, the vast majority of successful startups have raised some sort of a seed round prior to a series A. And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. Both factors will hurt your ownership relative to fund size.

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

Both Sides of the Table

NOVEMBER 14, 2017

Nearly every successful tech startup I’ve observed over the past 20 years has gone through a similar growth pattern: Innovate, systematize then scale operations. Innovate In the early years of a startup there is a lot of kinetic energy of enthusiastic innovators looking to launch a product that changes how an industry works.

Operations 286

Operations New York City Technical Review Startup 286

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Because the total percentage of equity will always equal exactly 100%, every time anyone gets another piece, by definition it “dilutes” all of the previous equity holders. Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

Both Sides of the Table

FEBRUARY 20, 2019

If you haven’t raised any money or if you raised a small round from angels or friends & family I would suggest you avoid setting up a formal board unless the people who would join your board are deeply experienced at sitting on startup boards. Who Should be on Your Startup Board? Of course it happens all the time?—?especially

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Both Sides of the Table

SEPTEMBER 28, 2014

I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. I love how transparently Danielle lives her startup (& encourages other to join in) because it provides much needed transparency to other startups. ” I highly recommend reading it.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

JULY 1, 2022

Wouldn’t you like to be one of the lucky people who joined Google and Facebook when these were startups, and now be a multi-millionaire or better? So people ask me “How many shares should I ask for or expect when I join a startup today?” Thus, options don’t “pay the mortgage” today, so to speak. It’s a huge gamble.

Stock Options 343

Stock Options Advisory Board Stock Startup 343

Startup Professionals Musings

AUGUST 4, 2014

Two heads are better than one, so the first task in many startups is finding a co-founder or two. The default answer, to keep peace in the family, is to split everything equally, but that’s a terrible answer, since now no one is in control, and startups need a clear leader. The CTO of many technical startups was the original founder.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

Startup Professionals Musings

NOVEMBER 10, 2012

Most investors and startup professionals expand this concept of focus to apply to key issues of every aspect of strategic and tactical planning in a startup. It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers.

Startup 254

Startup Technical Review Dilution Early Stage 254

Both Sides of the Table

SEPTEMBER 17, 2011

I recently wrote a post about why I didn’t think early-stage startups should have COOs. What a luxury in a startup to have the number one person in the business get to focus on just strategy? Dilute your cash, equity or both. I expected it to be controversial and it was. I find them strange. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

Startup Professionals Musings

JULY 31, 2012

Focus on finding the right partner to double your strength rather than dilute it. Investors know this, and look for two or three-person teams who have the requisite complementary skills. If you are the non-technical one, don’t try to hire your way out of this problem. Marty Zwilling.

Technical Review 230

Technical Review Technology Founder Management 230

ReadWriteStart

JANUARY 13, 2024

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Startup Professionals Musings

APRIL 27, 2019

Most investors and startup professionals expand this concept of focus to apply to key issues of every aspect of strategic and tactical planning in a startup. It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers.

Technical Review 255

Technical Review Dilution Early Stage Product Development 255

YoungUpstarts

MAY 6, 2019

by Arsalan Sajid, startup community manager at Cloudways. Life is not a box of chocolates and startups are not always easy to start. There is a complete process that governs the startup lifecycle including inception to exit. This startup stage starts from the day you decide to work on a startup idea. Early Stage.

Startup 113

Startup Technical Cofounder Merger Early Stage 113

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. The downside is loss of control and financial dilution. Otherwise exit and startup with another idea.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Austin Startup

JULY 6, 2018

Background Reading: Why startups need signals. Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Anti-Dilution. Originally published at Silicon Hills Lawyer.

Dilution 48

Dilution Startup Technical Review Equity 48

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. Let me paint the picture for you: We were about two months into our startup idea.

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

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. The simplest illustration is the first VC funding round of a new startup.

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Startup Professionals Musings

SEPTEMBER 27, 2023

Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ).

Stock 240

Stock .Net Vesting Founder Vesting 240

Startup Professionals Musings

JUNE 5, 2015

Entrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). Thus investing in startups should always be approached as a low odds game.

Angel Investor 120

Angel Investor Angel Groups Accredited Investor IRR 120

Startup Professionals Musings

JANUARY 31, 2020

In my work with new startups, I often find people who believe that the terms “ entrepreneur ” and “ inventor ” are interchangeable. In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Yet I find a big difference between “starting a new business” and “creating a new product.”

Founder 312

Founder Intellectual Property Dilution Startup 312

Startup Professionals Musings

JANUARY 4, 2020

They know from forums such as Shark Tank on TV that asking for either too much or too little will derail credibility in the eyes of the investor, and leave the entrepreneur with no money and a struggling startup. This is all about setting a credible current value on your startup -- not future value. Marty Zwilling.

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Startup Professionals Musings

AUGUST 27, 2010

Most investors and startup professionals expand this concept of focus to apply to key issues of every aspect of strategic and tactical planning in a startup. It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Marty Zwilling.

Startup 227

Startup Technical Review Dilution Early Stage 227

Startup Professionals Musings

JANUARY 15, 2021

Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ).

Vesting 298

Vesting Dilution Stock Founder Vesting 298

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. There are a lot of variables to go into calculating a fair equity split a startup team. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Business Plan Blog

JANUARY 9, 2014

Steve Rowles has been serving the San Diego startup ecosystem for over 20 years. Steve recently spoke to a group of entrepreneurs about the top 10 reasons why startups fail. Top 10 Reasons Why Startups Fail. Fear of Dilution. Startup Funding' Taking Money From The Wrong Investors. Neglecting The Legal Foundation.

San Diego 74

San Diego Dilution Technical Review Forecast 74

YoungUpstarts

OCTOBER 24, 2013

One of the challenges for investing in startups has always been the lack of an established way for founders and investors to actually measure and decide on the valuation of the startup concerned. “If you are an angel investor and a venture is seeking capital from you, insist on getting its Worthworm report.

Pre-Money Valuation 150

Pre-Money Valuation Web Technical Review Angel Investor 150

Startup Professionals Musings

JANUARY 19, 2020

Venture capitalists (VCs) have long been seen as the top of the pyramid for startup funding sources, but in fact angel investors now fund over twice as many companies, according the Crunchbase. The cost of entry for tech startups continues to go down. Super angels have greater scope to match talent with a startup.

Angel Investor 314

Angel Investor Venture Capital Silicon Valley Startup 314

Both Sides of the Table

FEBRUARY 19, 2019

Startups that are backed by professional financial investors almost always have a Board of Directors that consists of some set of founders, investors and sometimes independent directors. It is worth pointing out that there are actually three levels of governance in venture-backed startups. This is often called “corporate governance”?—?in

Startup 204

Startup Dilution Government Stock Options 204