Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. This was an audience of mostly first-time entrepreneurs. It is great for entrepreneurs and great for VCs. So here is what I have been telling entrepreneurs privately for the past 6 months. I said that at the Founder Showcase, too.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. Burn rate in case you don’t know is the amount of money a company is either spending (gross) or losing (net) per month. (it

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Lightspeed Venture Partners

OCTOBER 7, 2012

The founders were very sympathetic; a man, laid off from his job, and his very pregnant wife, who sold their house and investing $150k into the business and are working hard to make a go of it. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

View from Seed

FEBRUARY 19, 2015

This is a guest post from Rob May , a co-founder and CEO of Backupify , which raised $19.5M Hang out with other founders and CEOs. Other CEOs are the only people you can sit down and talk with about the hardest parts of your job. Special thanks to Rob May for sharing his advice to other startup CEOs and entrepreneurs.

Founder 120

Founder Startup Cofounder Business Model 120

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. Patrick Collison , self-made billionaire founder of Stripe. Bill Gates , founder of Microsoft. What should we keep and what should we change? Team, product, market. What matters most?

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

YoungUpstarts

JUNE 26, 2020

The real issue here is that if an entrepreneur comes in to a pitch and goes on and on about how they’re going to build a billion dollar company in just a few years, most investors eyes tend to glaze over. Like Jerry Yang who started Yahoo, as investors we are looking for entrepreneurs who are obsessed with a new technology.

Finance 180

Finance Silicon Valley Valuation Startup 180

Berkonomics

OCTOBER 18, 2018

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO. That one hurts early investors and founders more than perhaps any other action by investors.

Valuation 96

Valuation Dilution Down Round Employee 96

crowdSPRING Blog

MAY 10, 2013

The Start-up Hall of Shame (America’s 10 Worst States for Entrepreneurs) – [link]. Startup Founders: Don’t Forget to Sell the Dream | by Jason Shen – [link]. The Damaging Psychology of Down Rounds | by Mark Suster – [link]. Startups: You Should Value Software More | by Wade Foster – [link].

Social Media 93

Social Media Small Business Design Media 93

Startup Professionals Musings

JANUARY 27, 2012

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Outline multiple tranches.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Feld Thoughts

APRIL 21, 2016

. “Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees.

Marketing 70

Marketing Down Round Startup IRR 70

NZ Entrepreneur

SEPTEMBER 16, 2020

The statistics show that even though most founders bet their time and resources that their startups will be the best in the world, 90% of those new startups won’t be in operation in 10-15 years. Founders are typically ambitious when projecting sales volumes. No one can predict the future and it’s especially true in the startup world.

Startup 69

Startup Sales Cycle Down Round Revenue 69

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Outline multiple tranches.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

SEPTEMBER 27, 2010

These days that’s not the case and it’s a great outcome for entrepreneurs and for innovation. And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge. A: Only because it’s a nicer branding for entrepreneurs. That’s awesome.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Outline multiple tranches.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Both Sides of the Table

FEBRUARY 4, 2016

61% of VCs said valuations were “marginally down” in Q4 of 2015 but 91% expect price decreases in the next two quarters. Most flat rounds. More down rounds. More structured rounds. When we surveyed more than 150 VC firms for what they were seeing in the market, the data were pretty clear.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Growthink Blog

MAY 23, 2011

An entrepreneur starts a company in classic " bootstrap " fashion - with a combination of sweat equity and their own financial resources. The angel then introduces the entrepreneur to his or her wealthy friends and business connections who, based on the good reputation of the referring angel, also invest. All live happily ever after.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Both Sides of the Table

FEBRUARY 8, 2016

We entrepreneurs have been spinning that line for decades in every boom cycle. If you can get a round done at the price you expect – well done. Don’t assume that you can “just do a down round” if necessary. Down rounds are corrosive. Founders hate them because they’re dilutive.

Burn Rate 150

Burn Rate Cap Table Startup Balance Sheet 150

David Teten

AUGUST 7, 2019

Likely signs of a Momentum investment: the round is oversubscribed and the entrepreneur has more negotiating leverage than VCs during the closing process. . The reverse also holds: a Value investment can become Momentum, and then follow with a down round. LTV / CAC, revenue growth, etc.) Requires less analysis.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. 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. How to pump up your VC valuation. Post-Money.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Berkonomics

OCTOBER 7, 2011

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO.

Valuation 54

Valuation Dilution Down Round Employee 54

www.quora.com

SEPTEMBER 22, 2011

Type to Add and Search Questions; Search Topics and People Startups Startup Compensation Entrepreneurship Compensation Stock Options Major Internet Companies Silicon Valley Why is there such a large founder to early employee equity drop-off? The barrier between entrepreneur and money (incubators, angels, etc.) is lowered.

Equity 40

Equity Employee Founder Cofounder 40

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). My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. Drag-along. Future rights.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Hippoland

NOVEMBER 13, 2016

When I was an entrepreneur, it never crossed my mind how VCs measure their success. So, as an entrepreneur, in many cases, you are pitching people who may not even be good investors. If a company raises a good round, it gets marked up to the new value. And if a company takes a down-round, it gets marked down.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) The Customer Development Venture Pitch At this point I often hear entrepreneurs say, “We don’t have the money to scale. How do we raise the big bucks?”

Lean 244

Lean Silicon Valley Startup RSS 244

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

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. Their own ego is also a factor – will a down round signal weakness?

IPO 40

IPO Term Sheet Valuation Silicon Valley 40

Both Sides of the Table

FEBRUARY 14, 2016

I’d like to explain as best I can my opinion on what is going on because most of what I hear from entrepreneurs is not only wrong but is reminiscent of what I heard in 1997-2000. ” “This will be great for VCs and bad for entrepreneurs.” What is the True Sentiment of VCs? ” “Sure, prices are dropping.

Valuation 150

Valuation Down Round Startup Later Stage 150

NZ Entrepreneur

JULY 8, 2019

In the first of a three part series on early stage business investment, we asked serial entrepreneur and investor Josh Comrie what three key things New Zealand entrepreneurs must get better at when it comes to seeking angel investment. I personally funded my first ventures, then led the two rounds that have seen Ambit take in $2.2m

New Zealand 42

New Zealand Entrepreneur Valuation Dilution 42

Genuine VC

FEBRUARY 9, 2011

Plus, VCs often will have met the Founder/CEOs of many of a particular startup’s competitors, so they’ll have an even richer understand of the market landscape. Has there ever been a down round, inside round, a flat round, or a CEO change?

Startup 146

Startup Burn Rate Technical Review Down Round 146

NZ Entrepreneur

JULY 30, 2020

For some founders, negotiating a seed investment can be difficult. The following highlights some ways founders sometimes trip up in negotiating an early investment round, resulting in a deal they are unhappy with, a tainted relationship with the investor, or losing the deal altogether. Momentum is key.

Term Sheet 67

Term Sheet Due Diligence Valuation Down Round 67

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. BC: Yeah, Reid.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Altgate

MARCH 8, 2009

I say ecosystem as opposed to industry because it is not just the VC funds themselves that are imploding, instead the collapse includes entrepreneurs and startups that were funded by VCs, angel investors, service providers like lawyers, bankers and accountants as well as limited partner investors in VC funds. But some will be saved.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34