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? This ties into this Paul Graham article: [link] /equity. Login if you already have an account.

Equity 40

Equity Employee Founder Cofounder 40

crowdSPRING Blog

FEBRUARY 21, 2014

The Right Way to Grant Equity to Your Employees - crowdspring.co/1bCrvce. The Right Way to Grant Equity to Your Employees – crowdspring.co/1bCrvce. How You Get Slaughtered in a Down Round: When Taking Venture Capital Doesn’t Go as Planned – crowdspring.co/MvF29W. Well done, DHL! ” - crowdspring.co/1fjSpog.

Social Media 92

Social Media Small Business Design Media 92

Both Sides of the Table

SEPTEMBER 28, 2014

So money spent should add equity value or create IP that eventually will. Simply put – down rounds are very hard to achieve psychologically because insiders fight against them (rightly or wrongly) and outsiders have a mental gap that if your valuation is going down your company is forked up and they often just pass.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Berkonomics

AUGUST 3, 2023

They have been burned too badly during the last decade by overvaluing businesses and finding themselves like friends and family, “stuffed” into a down round of lower valuation when a company takes its next round of financing from the next step, venture capitalists. These include Y-Combinator and TechStars, among others.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Startup Professionals Musings

MAY 20, 2016

Granted, all the experience so far has been without the most anticipated feature of the JOBS Act – Equity Crowdfunding (Title III) , effective a few days ago with 685 pages of rules. At least ten online portals are already gearing up to help regular people buy startup equity, without abiding by accredited investor rules.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Both Sides of the Table

SEPTEMBER 18, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? “But lawyers will charge much more for equity.” Lawyers don’t make money on your seed round in any instance. Try doing THAT with equity. And so forth.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

JUNE 22, 2011

But this mania to not miss out on the next big thing is driving some investors to pay growth-equity prices for traditional market risk (as in, they’re paying up before it is clear there is product / market fit). And so on down then line. New investors hate down rounds. And well they should be.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

VC Cafe

MAY 18, 2022

venture capital and private equity) the VC index (by Refinitiv) shows a nearly 40% decline. Down rounds are coming. Stablecoins like Terra/ Luna (a $40 billion market cap), which were supposed to be pegged to dollar and keep a steady value, collapsed to practically zero. And in the private markets (i.e.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

Startup Professionals Musings

JANUARY 27, 2012

Define equity type. Venture capitalists and later round investors like the preferred convertible shares. This clause attempts to protect the conversion price of stock of Angel investors, prior to additional financing, from being reduced to a price equal to the price per share paid in a later “down” round.

Term Sheet 223

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

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

SEPTEMBER 14, 2010

Define equity type. Venture capitalists and later round investors like the preferred convertible shares. This clause attempts to protect the conversion price of stock of angel investors, prior to additional financing, from being reduced to a price equal to the price per share paid in a later “down” round.

Term Sheet 227

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

ithacaVC

NOVEMBER 14, 2014

Hopefully, it’s in high demand for good reasons, otherwise you risk a down round in the future. The latter won’t be enough money to grow and without the capital to grow, could risk failing or a down round. Don’t risk a down round. Take a moment and project out your equity over multiple rounds of financing.

Valuation 69

Valuation Startup Down Round Early Stage 69

Berkonomics

JUNE 8, 2017

They have been burned too badly during the last decade by overvaluing businesses and finding themselves like friends and family, “stuffed” into a down round of lower valuation when a company takes its next round of financing from the next step, venture capitalists. These include Y-Combinator and TechStars, among others.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Gust

SEPTEMBER 17, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? But lawyers will charge much more for equity.” Lawyers don’t make money on your seed round in any instance. Try doing THAT with equity. Me: More dilution? And so forth.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

OCTOBER 17, 2011

Define equity type. Venture capitalists and later round investors like the preferred convertible shares. This clause attempts to protect the conversion price of stock of angel investors, prior to additional financing, from being reduced to a price equal to the price per share paid in a later “down” round.

Term Sheet 158

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

Reid Hoffman

JUNE 8, 2021

If I could add one more bonus idea, this is if you’re incorporating your company, I would think about taking 1% or 2% equity and setting it aside for other stakeholders. And I made a decision not to do an equity round, because I thought it would be a down round. So these are some checklists. Let’s go with debt.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Hippoland

NOVEMBER 13, 2016

Primarily these things: Companies dissolvingCompanies exitingCompanies raising equity rounds All of these events are concrete events that attach a numerical value to a company. 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

www.mattbartus.com

DECEMBER 9, 2012

In Equity , Investors , Negotiating , Term Sheets Equity , Negotiating , Valuation , VCs. Equity for Consultants - Keep. Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Obama Administration doubles. link] Brad Hargreaves.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Bryce Dot VC

APRIL 19, 2016

Most had structured their seed rounds as bridge notes (a fancy term for a loan) that would convert to equity when the anticipated future round of funding closed. Anything less than the arbitrary cap they’d set at their seed was believed to be a down round.

Valuation 40

Valuation Down Round Equity Conversion 40

The Equity Kicker

MARCH 24, 2015

And don’t forget the prime directive of fundraising strategy: set things up so that you never do a down round. The badness of a down round is difficult to overstate; in fact, the threat of that is the best reason not to take a super high price when you’re offered one.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

A Crowded Space

MAY 31, 2016

We expect there to be an increase in down rounds, flat rounds, inside rounds and various pay-to-play scenarios. A 5% equity stake could get cut down to 1%. But, this year we’ve seen the greed of the last several years switch to fear. But, many of them do not have strong reserves for their portfolio.

Cram Down 60

Cram Down Pay to Play Angel Investor Warrant 60

Reid Hoffman

JUNE 8, 2021

If I could add one more bonus idea, this is if you’re incorporating your company, I would think about taking 1% or 2% equity and setting it aside for other stakeholders. And I made a decision not to do an equity round, because I thought it would be a down round. So these are some checklists. Let’s go with debt.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

The Equity Kicker

JANUARY 22, 2014

You fall into the spiral of death: head of sales gets replaced (at least once), CEO gets replaced (at least once), a down-round financing happens (if lucky). Investors who paid up for your financing are not happy.

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

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 typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. And they hire very aggressive securities attorneys to represent their interests.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

The Equity Kicker

JULY 9, 2015

I’ve been here before too, when implementing anti-dilution clauses after down-rounds. And we still have to get all parties to understand and buy into our spreadsheet so it isn’t over yet. It shouldn’t be necessary.

Dilution 60

Dilution Down Round Finance Software 60

The Equity Kicker

NOVEMBER 20, 2015

I say that because investors in the $6bn round in Square have still made money on the deal. They had a ‘ratchet’ which repriced their investment in the event of a down round to give them a 20% return. That’s a good return, but it came in a way that investors won’t want to repeat.

IPO 60

IPO Matching Ratchet Valuation 60

David Teten

AUGUST 7, 2019

“You could argue that when they were [raising] oversubscribed [VC rounds], Facebook, Google, Amazon, etc., The reverse also holds: a Value investment can become Momentum, and then follow with a down round. were clearly Momentum, but [in hindsight] they were also Value.” A tiny number of winners drive VC returns.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

The Equity Kicker

JANUARY 25, 2016

However severe our current situation is, I’m sure there will be plenty of short term negatives, including more job losses, company failures and down rounds. Startups everywhere will need to adjust their fundraising strategies and good investors will be helping them to adjust quickly – it’s much less painful that way.

Venture Capital 60

Venture Capital Angel Investor Startup Participating Preferred 60

Berkonomics

JANUARY 20, 2010

They have been burned too badly during the last decade by overvaluing businesses and finding themselves like friends and family, “stuffed” into a down round of lower valuation when a company takes its next round of financing from the next step, venture capitalists.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Tim Keane

AUGUST 20, 2009

"  The problem has been that too-high valuations and too generous terms have spawned painful down rounds that squash the entrepreneur and his early investors.    New money, usually VC money, comes in and crams down those early investors and takes substantial shares from the entrepreneur. 

Milwaukee 60

Milwaukee Bootstrapping Cram Down Deal Structure 60

Scalable Startup

OCTOBER 26, 2011

It’s no longer based on a hunch, unless the company is in trouble and needs money to finish what the first round started. This problem often leads to a lowered valuation or “down round” Not a great scenario.) If the company is doing well, the second round is easier to acquire.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

www.paulgraham.com

APRIL 28, 2010

It costs you a little more equity, but being able to play the two firms off each other (as well as ask one if the other is being out of line) is invaluable. 10 ]One new thing the company might encounter is a downround , or a funding round at valuation lower than the previousround. Onefounder I know wrote: Two-firm deals are great.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Both Sides of the Table

FEBRUARY 14, 2016

In the case of startups the “buyer” is the VC looking to part cash for “purchasing” equity in your startup. Why Down Rounds are Harder Than You May Think. Down rounds are hard. A slight down round is achievable but massive “hair cuts” are very hard to do.

Valuation 150

Valuation Down Round Startup Later Stage 150

abovethecrowd.com

APRIL 20, 2016

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. Their own ego is also a factor – will a down round signal weakness? A down round is nothing. Get over it and move on.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Altgate

MARCH 8, 2009

Later stage funds will end up owning more of their portfolio companies via down rounds and ultimately should see ok returns. What I can tell you is that total private equity assets under management was reported as $2.5 As I mentioned earlier, these are all private companies so data is hard to come by.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34