This is going to be BIG.

AUGUST 21, 2023

Before we get into a debate about how much a founder should own, there’s a context implicit in the question that is easily overlooked. It’s this part: “I’m getting inbound from investors…” Nearly all of the inbound VC interest happening out there is from non-partner investors (i.e. A check-writing partner reaches out to you.

Cap Table 78

Cap Table Term Sheet Database Option Pool 78

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

Both Sides of the Table

MAY 30, 2018

What was the post money on your last round (and how much capital have you raised)? It’s not uncommon for a VC to ask you how much capital you’ve raised and what the post-money valuation was on your last round. VCs hate “down rounds” and many don’t even like “flat rounds.” There are some simple reasons. After all?—?we

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Berkonomics

MARCH 30, 2010

It is not a strong bargaining position for the CEO to ask for money to complete a product promised for completion with the previous round of funding. And we were able to secure that investment along with a partner from that firm joining our board.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

VC Cafe

FEBRUARY 27, 2024

A founder asked me what makes a $2M round “pre-seed”? And why do we still sometimes hear about pre-seed rounds that look more like a series A in pricing and size? What’s the difference between an angel round and pre-seed round and why do I believe we’ll see more pre-seed rounds taking place in 2024?

Valuation 186

Valuation Software Review Generative AI Technical Review 186

YoungUpstarts

JUNE 26, 2020

I always caution entrepreneurs not to take too high a valuation in any round because it sets very high expectations for the next round. A down round, which can damage a company and make it difficult to raise money in the future. He is also a venture partner at several VC firms. What happens then?

Finance 205

Finance Silicon Valley Valuation Startup 205

This is going to be BIG.

JANUARY 17, 2016

They might have to get another round in, and that round will most certainly be a down round. They might be doing board meetings more frequently, coaching first time founders through layoffs and debating with their partners which companies they should bridge until things thaw out. They're just.

Dilution 60

Dilution Portfolio China Down Round 60

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). Strategic partner” investors: If you can find a strategic partner willing to invest in your enterprise, consider it a blessing.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Both Sides of the Table

FEBRUARY 4, 2016

Limited Partners (LPs) who invest in VC funds have continued to pour money into venture – with the market returning to pre-recession levels. 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.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

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. We need a new disruptive capitalism that is designed for a much more mature internet market, one that can bring founders, investors, and employees together.

Venture Capital 60

Venture Capital Angel Investor Startup Participating Preferred 60

Growthink Blog

MAY 23, 2011

Usually unbeknownst to all, the decision around pursuing or accepting a venture capital round will be the most important factor in determining the investment return for the founder and the original angel investors in the company. But here is the key – contrary to popular wisdom it is negatively correlated.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. You could argue that when they were [raising] oversubscribed [VC rounds], Facebook, Google, Amazon, etc.,

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

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). Yes for Series Seed holders and founders. Y Combinator Series AA Equity Financing Documents (by WSGR). Series Seed Financing Documents (by Fenwick & West). Drag-along.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Hippoland

NOVEMBER 13, 2016

But as we’ve seen, these valuations can be hocus-pocus — even at later stage rounds, we’ve seen lots of companies of late fall from grace and become massively devalued overnight when they cannot raise their next round at a higher valuation. If a company raises a good round, it gets marked up to the new value.

IRR 48

IRR Valuation Portfolio Due Diligence 48

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. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

VC Cafe

JANUARY 2, 2023

As Vintage Venture Partners put it in a recent presentation shared in Tel Aviv , 2022 started off well but fell of a cliff in the second half (the slides were shared on Twitter by Amitai Ziv from Tech 12 ). A report by Greenfield Partners puts the total fundraising of Israeli startups at $15.16 2022 in Israeli tech and venture.

Valuation 159

Valuation Down Round Venture Capital 159

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. Accel Partners.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

www.paulgraham.com

APRIL 28, 2010

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. Few startups get it quite right.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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 Silicon Valley Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

No you’re kind of f *d because nobody wants to buy any at all and your bank is calling you concerned that you may need to slow down your pace of new purchases for a bit. Many experienced partners are funds have 7-10 boards and most of these will need more capital. So when prices go down their first reaction is, “S**t.

Valuation 150

Valuation Down Round Startup Later Stage 150

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. Which VC firm provided the most recent funding round and when was it? 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

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. Greylock Partners · Brian Chesky | People-First Capitalism. So we have to think of ourselves as partners. EPISODE TRANSCRIPT.

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

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. Greylock Partners · Brian Chesky | People-First Capitalism. So we have to think of ourselves as partners. EPISODE TRANSCRIPT.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

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. Mark dutifully went to partner meetings, back-channel references began, firms started calling existing VCs to “test prices” and we started debating whom our best partner would be.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

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. Founders that raised party rounds are quickly discovering the downside of not having any larger, more committed investors. 2) Some insiders are supportive. 3) All insiders are supportive.

Cram Down 60

Cram Down Pay to Play Angel Investor Warrant 60

NZ Entrepreneur

JULY 8, 2019

If a valuation is too low, the founders become over-diluted over time and will struggle to do a later series A or B raise if they’re sitting at single digits – global venture capitalists (VCs) won’t touch this scenario. Who does this investor know in the customer, partner and executive space they can introduce you to? Valuations.

New Zealand 42

New Zealand Entrepreneur Valuation Dilution 42

Scalable Startup

FEBRUARY 1, 2013

Number one is, a lot of companies need to actually educate their customers or their partners, and a lot of that has to happen online. Alexia Tsotsis: Are you seeing down rounds because the NASDAQ is down? Marc Andreessen: No, we have not seen down rounds yet.

Software Review 22

Software Review Startup Venture Capital Stock 22