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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. The former is much more likely than the latter. The risk wouldn’t be appropriate.

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5 Crowdfunding Concerns Worry Professional Investors

Startup Professionals Musings

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Later funding rounds can’t deal with a thousand shareholders. Even if the additional rounds are also crowdfunded, the same considerations apply.

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5 Equity Crowdfunding Reflections Before You Sign Up

Startup Professionals Musings

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Later funding rounds can’t deal with a thousand shareholders. Even if the additional rounds are also crowdfunded, the same considerations apply.

Equity 411
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On Bubbles … And Why We’ll Be Just Fine

Both Sides of the Table

And this is happening in mezzanine (pre-IPO) deals as well. And post IPO deals, although these tend to correct more quickly. If everybody is over-paying for early-to-mid stage deals you’d imagine that these all need to feed into a frenzied M&A and IPO market that will garner big returns for these risks investors are taking.

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On the Square and Match IPOs and hopes for a correction

The Equity Kicker

Match.com and Square both enjoyed strong first days after their IPOs yesterday. However in the run up to its IPO Square had indicated it would go out at between $11 and $13 per share, and then ended up at $9, and in October last year Square raised $150m at a $6bn valuation.

IPO 60
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Bad Notes on Venture Capital

Both Sides of the Table

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? Lawyers don’t make money on your seed round in any instance. They are investing in your relationship in hopes that you do an A, B and C round. Me: More dilution? Employment.

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Professional Investors Qualms About Crowdfunding

Startup Professionals Musings

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Later funding rounds can’t deal with a thousand shareholders. Even if the additional rounds are also crowdfunded, the same considerations apply.