Up and Running

AUGUST 17, 2015

Additionally, I had already studied Economics and Finance during undergrad, making the academic part of an MBA seem a little redundant. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). Is business school really necessary? See Also 35 Way to Fund Your Small Business.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Both Sides of the Table

SEPTEMBER 16, 2010

This is the fourth article in a series on what it takes to be a great angel investor (and why this should matter to entrepreneurs). “When our capital and participation has helped de-risk a business to the point where it is appropriate to follow on and finance growth, we want to step up to do our pro rata and beyond.&#.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Deal Flow 283

Both Sides of the Table

FEBRUARY 23, 2015

For some aspiring to be tech entrepreneurs, I often suggest a two-step process, as I argued in this post that “ The First Startup Founder You Need to Invest in Is You.” We did the early round of financing and the founding team walked when the market turned and when the situation got tough. ” (Warren Buffett).

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

ReadWriteStart

SEPTEMBER 2, 2011

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and a critical step in the development of their business.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

Both Sides of the Table

SEPTEMBER 5, 2012

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. Was Paul Graham right in his “high resolution” financing post? But entrepreneurs – convertible notes have no MINIMUM!

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

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. Either that or they’re dumb. Last year ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Feld Thoughts

FEBRUARY 9, 2016

And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. We entrepreneurs have been spinning that line for decades in every boom cycle. Until you are consistently generating positive cash flow, you depend on someone else for financing.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I normally offer this advice in the capacity of really wanting to help entrepreneurs so please bear with me. Let’s say the company had raised $15 million.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

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. Liquidation preference.

Term Sheet 223

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

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

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. Liquidation preference.

Term Sheet 227

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

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. What is a Convertible Note? price the round).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

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. Liquidation preference.

Term Sheet 158

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

Feld Thoughts

JUNE 2, 2015

The other day, Mark Suster wrote a critically important post titled One Simple Paragraph Every Entrepreneur Should Add to Their Convertible Notes. As an angel investor, I have never asked for a liquidation preference on conversion that is greater than the dollars I’ve invested. Go read it – I’ll wait.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

www.readwriteweb.com

DECEMBER 29, 2011

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

David Teten

AUGUST 21, 2019

Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. These entrepreneurs want to maintain two major options: 1) To raise VC later (or not), and/or. But you also can’t run the company forever, since investors need a liquidity event. Optionality.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

genylabs.typepad.com

SEPTEMBER 24, 2011

The Changing Face of Entrepreneurs. The Connected World of Entrepreneurs. Entrepreneur Magazine Blog. I wont bother going into details on start-up financing terms ( see this post for an overview of typical VC terms) except to say if you dont know and understand: the firms cap table and valuation. immigrant entrepreneurs.

Equity 40

Equity Technical Review San Jose Stock 40

Growthink Blog

MAY 23, 2011

The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. An entrepreneur starts a company in classic " bootstrap " fashion - with a combination of sweat equity and their own financial resources. All live happily ever after. It all sounds wonderful and it is.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Professor VC

APRIL 1, 2010

was part of a Dow Jones VentureWire webinar last week titled Negotiating An Angel Deal: What Angels, Entrepreneurs & VCs Need to Know. I prefer the traditional face to face where you can interact with the other panelists and audience, but was the first panel I did wearing my favorite flannel penguin pajamas. Well, not exactly.I

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

techcrunch.com

FEBRUARY 25, 2010

This is probably why investors’ case for a company to sell early f ocuses exclusively on the founder : in most early-stage acquisitions, the liquidation preferences and deal-sweeteners only work for investors and founders. There is no liquidation preference, severance payment or earn out. But the reverse is happening.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

K9 Ventures

JUNE 5, 2015

In that presentation, I said that Seed is not the first round of financing any more and that K9’s investments were mostly “pre-seed”. The founders of these funds are entrepreneurs in their own right and every entrepreneur has an innate desire to make things grow. A re-jiggering of deal stages and sizes had begun in 2013.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Both Sides of the Table

SEPTEMBER 6, 2010

But if you’re the CEO who is spinning up a story about how the options for non-founders, non-VPs is going to be worth a lot some day then you’re probably doing some young entrepreneur a disservice at your expense.** And when they figure it out some day they’re not likely to be very loyal moving forward.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

Scott Edward Walker

AUGUST 31, 2011

Introduction This post was originally part of the “ Ask the Attorney ” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). We’re first time entrepreneurs, and we don’t know if this is standard practice and what we should do. Which financing sources should they consider?

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

VC Adventure

AUGUST 30, 2010

I think the answer to these questions are that 1) it’s not at all clear that this trend is as definitive as Graham suggests; 2) it’s a mixed bag for entrepreneurs (more positive in the short run, potentially negative in the long term); and 3) it’s clearly not a positive trend for early-stage investors. Good for investors?

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

Spencer Fry

APRIL 17, 2017

You can also getaway with giving up zero-to-little equity if you finance the business out of your own pocket or through other means, such as consulting. As a bootstrapper, you have nobody above you on the cap table (note: investors sit above you in their liquidation preference), so it’s your way or the highway.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Scott Edward Walker

JULY 27, 2011

There is, however, another set of rights with which many entrepreneurs may not be familiar: State law rights. These are rights granted to stockholders pursuant to the respective laws of the company’s State of incorporation and are often the only rights that minority common stockholders have.

Delaware 49

Delaware Liquidation Preference Redemption Los Angeles 49

SoCal CTO

JULY 13, 2010

How-to learn about angel/vc term sheets - Gabriel Weinberg , June 28, 2010 I think every startup entrepreneur (and angel investor) should have a good understanding of financing term sheets. liquidation preference. You’re Not a Real Entrepreneur - Steve Blank , June 10, 2010 Who is an entrepreneur really?

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

www.mattbartus.com

DECEMBER 9, 2012

I just worked on a financing for a company that received a term sheet from a group of VCs at a $7 million pre-money valuation. My question is, can you elaborate on the benefits you see for the entrepreneur in trying to sell this to the investors? Why else might this be useful? link] Roy Rodenstein. link] Brad Hargreaves. Matt Bartus.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. It has both a “full rachet” and “multiple liquidation preferences.” Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. If you do an uncapped note it’s bad for the investor.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Professor VC

JULY 25, 2013

This is the feeling you get from watching the venture capitalists talk about the entrepreneurs and other investors in the film. In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

abovethecrowd.com

FEBRUARY 24, 2015

Historically, different financial institutions specialized in different stages, because the assessment of risk and opportunity was considered unique at each stage — for example, a seed investor was unlikely to do late-stage financing, and vice versa. These liquidation preferences give the investor a debt-like downside protection.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

The Equity Kicker

DECEMBER 30, 2013

Nassim Taleb is one of the most visionary thinkers in modern finance. Interestingly though, I think things end up looking pretty similar for the entrepreneur. His books Black Swan and Fooled by Randomness are must reads for anyone in the investment business. Thanks to Josh March for the pointer.

Finance 129

Finance Liquidation Preference Valuation Harvest 129

thestartuplawyer.com

FEBRUARY 24, 2010

Entrepreneurs often believe their startup company faces legal threats from only external sources. About the Author Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. And that’s a big mistake.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

dondodge.typepad.com

JANUARY 15, 2011

Entrepreneurs face some pretty tough questions at a very early stage. Both the entrepreneur and the investor have much higher expectations than just "even money" on their bet. The entrepreneur expects the company to be worth many times this valuation and so does the investor. Should I take Angel or VC money?

Equity 40

Equity Employee Dilution Valuation 40

www.founderinstitute.com

MARCH 2, 2010

He has been actively involved in merger, acquisition and disposition transactions with a combined value of over $1 billion, and financing/investment transactions and securities offerings worth over $600 million. Participation" means that investors "double dip" by getting both their liquidation preference and their equity allocation. -

Term Sheet 40

Term Sheet Liquidation Preference Vesting San Diego 40