Both Sides of the Table

JUNE 5, 2011

2 preamble issues having read the comments on TC today: 1: I know that the prices of startup companies is much great in Silicon Valley than in smaller towns / less tech focused areas in the US and the US prices higher than many foreign markets. That’s the deal you get when you’re raising in a good market for startup financing.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

VC Cafe

JANUARY 2, 2023

On a global level, venture financing of private companies dropped 33% year over year, from a record $733B in 2021 to $490B in 2022. A report by Greenfield Partners puts the total fundraising of Israeli startups at $15.16 Israeli startups 2022 funding summary. We started to see down rounds taking place especially in growth stage.

Valuation 158

Valuation Down Round Venture Capital 158

Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. I said that at the Founder Showcase, too. And for many of these they were (over) funded 7-10 years ago and don’t necessarily all represent great returns for investors or founders. New investors hate down rounds. That’s a fact.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Genuine VC

FEBRUARY 9, 2011

Evaluating a startup as a prospective employee is tough, especially when you compare to VCs. 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. Is it shooting for a big market?

Startup 146

Startup Burn Rate Technical Review Down Round 146

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

Both Sides of the Table

JULY 29, 2010

The A round was done in February 2000 (end of the bull market) and my B round was done in April 2001 (bear market). As a result I had to do a down round. Down rounds are psychologically really difficult on companies and can make it harder to do later rounds. I eventually needed more money.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

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. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.”

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Hunter Walker

AUGUST 8, 2023

Our estimates were not out of line with new data from top firms like USV who, according to reports, “ marked down the value of seven of its funds by nearly 26%.” Restructures, Down Rounds, and Pay to Plays. And fascinating new advances (and needs) in AI, climate, biology, etc are driving tech-IP driven startups.

Portfolio 98

Portfolio Cap Table LP Valuation 98

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. “Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. It’s long but worth reading every word slowly.

Marketing 70

Marketing Down Round Startup IRR 70

Both Sides of the Table

FEBRUARY 14, 2016

” “Mark has a vested interest in talking down valuations of startups.” Most prefer not to say this publicly for two reasons: 1) they have an entire portfolio of startups, many of whom are raising capital and 2) they prefer not to be attacked publicly or seem “anti entrepreneur.” goes into a startup.

Valuation 150

Valuation Down Round Startup Later Stage 150

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? Many startups these days are first-time entrepreneurs. is lowered.

Equity 40

Equity Employee Founder Cofounder 40

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

ithacaVC

NOVEMBER 14, 2014

I have written about startup valuations previously. If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. A founder is about to raise their first round and asking me how to value their company. [1]. Active users.

Valuation 69

Valuation Startup Down Round Early Stage 69

Both Sides of the Table

OCTOBER 18, 2015

“Trade in an asset at a price that strongly deviates from an asset’s intrinsic value” The arguments against that, “This time the startups have real revenues!” In 2014 3 out of 12 exits were occurred at a lower valuation than the previous round. 25% “down rounds? ” ring hollow.

IPO 150

IPO Venture Capital LP SEC 150

Startup Professionals Musings

SEPTEMBER 14, 2010

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Outline multiple tranches.

Term Sheet 227

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

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Outline multiple tranches.

Term Sheet 223

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

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. Founders often raise money from friends and family and other angels. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. Here is a quick guide.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

Both Sides of the Table

MARCH 30, 2016

Investors sat with the founder & CEO, Jason Spievak, and asked him what he wanted to do about the future. Investors had grown too used to the idea that any deal you funded would get marked up to a higher valuation in the next round and that’s clearly not always true. Great companies get financed.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Both Sides of the Table

SEPTEMBER 27, 2010

Industry change allows the entry of newer players at earlier stages – It doesn’t take as much money to launch a startup anymore. So in the past we needed VC to really get a startup going. And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

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

Growthink Blog

MAY 23, 2011

The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. This venture capital financing - usually between $3 and $10 million - is the first of a number of rounds of outside investment over a period of three to five years.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Both Sides of the Table

JUNE 5, 2016

The funding environment for tech startups is an ever shifting ground as we go through predictable shifts that go hand-in-hand with the slowing of the overall market. Boom in Number of Startups. There was an explosion in number of startups both because it was cheap and there was tons of available capital.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Bryce Dot VC

APRIL 21, 2016

“Why the Unicorn financing market just became dangerous…for all involved.” In Bill’s world, ALL involved in the Unicorn market include Founders, Employees, Investors, LPs, even Sovereign Wealth Funds. Or, that the public market is the only safe place for founders to escape short term investors in search of hyper growth?

Silicon Valley 40

Silicon Valley Dilution Term Sheet Down Round 40

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. — 23 Comments.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

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). For you who fit that description, nice work. Taking this kind of money has a number of pitfalls you should be aware of.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Scalable Startup

OCTOBER 26, 2011

The Second Round, or “B Round”, or “Follow On” round can be the achilles heel of a startup. No doubt the first round of external funding for a startup is usually critical to a startup as it can be the difference between continuing your startup or shutting it down.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22