Both Sides of the Table

MAY 30, 2015

I’m so tired of seeing young entrepreneurs get screwed by their angel investors on convertible notes and I know I can’t convince you not to do it so I’d like to offer one simple bit of advice to help you avoid getting screwed (at least on one part of your note). They get their full investment as a 1x liquidation preference.

Liquidation Preference 150

Liquidation Preference Ratchet Angel Investor Entrepreneur 150

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. I’m surprised how few entrepreneurs have this open conversation with their investors. In fact, most entrepreneurs I know don’t ask – why is that?

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Up and Running

AUGUST 17, 2015

As I read stories of college dropouts who had successfully sold tech companies, or entrepreneurs with innovative ideas who made it big on Shark Tank, it became clear that there was no set path to startup success. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on).

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

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.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

FEBRUARY 23, 2015

But not everybody has the right skills to build a highly successful and valuable startup from scratch. 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.”

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

Steve Blank

MARCH 16, 2016

There are many reasons to found a startup. There are many reasons to work at a startup. To most founders a startup is not a job, but a calling. But startups require money upfront for product development and later to scale. Traditional lenders (banks) think that startups are too risky for a traditional bank loan.

Liquidity Event 120

Liquidity Event Founder Liquidation Preference Venture Capital 120

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). I know some people think the whole market has been disrupted and startups and funding work differently these days. Tags: Startup Advice Tech Market Analysis VC Industry. This is actually the norm.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Deal Flow 283

Startup Professionals Musings

JULY 3, 2014

As an Angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and then disappear into the sunset. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I''m from the IRS and I''m here to help”).

Term Sheet 237

Term Sheet Advisory Board Liquidation Preference Startup 237

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. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

A Smart Bear: Startups and Marketing for Geeks

SEPTEMBER 8, 2010

It's nice to highlight awesome articles about startup that I didn't write! 6 Simple Selling Tips For Software Entrepreneurs [link] (from OnStartups). 6 Simple Selling Tips For Software Entrepreneurs. US Economic Risks (Sept 2010): Impact on Investors & Entrepreneurs [link]. Startup Business Checklist 2010 [link].

Liquidation Preference 216

Liquidation Preference Silicon Valley Startup Software 216

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. And a few teams of super talented, educated and bright entrepreneurs make a few mill. Almost certainly the startup would have raised some capital. Go do a startup.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

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. Tip 2: Have a "real" lead.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. 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. times at six years.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

SEPTEMBER 26, 2015

Most entrepreneurs looking for an investor can tell you how much money they need, but few have given much thought to what they are willing to give up for it. In very early startups, which have no valuation, the term sheet may specify a convertible note. A startup board of five or fewer members is optimal.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

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

Startup Professionals Musings

FEBRUARY 3, 2018

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I'm from the IRS and I'm here to help”).

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

Both Sides of the Table

SEPTEMBER 28, 2013

So as a startup CEO you constantly have to suspend disbelief. ” A startup CEO’s job is to absorb stress so the team doesn’t have to. Startups have to be optimists because no rational person would actually believe you could build Uber into the amazing company that it is today. We just need your $500,000!!”

Startup 417

Startup Dilution San Diego Stock Options 417

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

Gust

APRIL 16, 2014

Invested Interests business entrepreneur investor contract startup' But something like that would be way, way outside the norm. original post can be found on Quora @ [link] *.

Liquidation Preference 152

Liquidation Preference Revenue Entrepreneur Startup 152

The Equity Kicker

JUNE 28, 2013

Otherwise the investors won’t make the multiple on their investment that they want and after liquidation preferences are paid the amount left for the entrepreneur may well also be disappointing. back making 8.3x (£2m off the top and then 33% of the remaining £19m) and the entrepreneur makes £12.7m. Nobody is happy.

Liquidation Preference 116

Liquidation Preference Valuation Portfolio Operations 116

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. 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. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Startup Professionals Musings

AUGUST 16, 2015

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I'm from the IRS and I'm here to help”).

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

Feld Thoughts

MAY 7, 2012

Down: Liquidation preference. In reality it mainly gives one the ability to know what’s actually going on, to the extent that anyone knows what’s actually going on in a fast moving startup. Entrepreneurs – don’t get confused by the endless mumbo-jumbo. Up: Pro-rata rights.

Liquidation Preference 143

Liquidation Preference Term Sheet Search Entrepreneur 143

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

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

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 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. Tip 2: Have A Real Lead.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

Altgate

OCTOBER 8, 2009

Raising Capital: 5 Reasons Convertible Debt Sucks HOT The Collapse of the VC Ecosystem & What It Will Look Like Post Recovery 10 Tips On Negotiating With VCs Dating…er…Fundraising Etiquette The Science & Art of Term Sheet Negotiation HOT How Liquidation Preferences Work HOT How Much Money Should I Raise?

Term Sheet 39

Term Sheet Technical Review Michigan Liquidation Preference 39

Scott Edward Walker

DECEMBER 29, 2011

Moreover, I’m publishing an eBook with Hyperink entitled The Startup Law Playbook , which should be available shortly. Legal Checklist for Startups 2. House Passes Crowdfunding Bill: FAQ’s For Entrepreneurs 3. How To Hire A Superstar Engineer For Your Startup 5. What Is A Liquidation Preference?

Antidilution 66

Antidilution Liquidation Preference Term Sheet New York City 66

Both Sides of the Table

NOVEMBER 4, 2009

This is part of my Startup Advice series. I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X&# or not. at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Altgate

JANUARY 5, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! Tips: $75 Killver VC Pitch Deck Not much to learn here. Bookmark the permalink.

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28

David Teten

AUGUST 21, 2019

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. So you’re stuck selling mid-term, which is frequently sub-optimal for the entrepreneur. “. RBI investors usually don’t take equity.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

SoCal CTO

JULY 13, 2010

Some great content around the intersection of startups and being a Startup CTO in June this year. This continues my series of posts: Top 29 Startup Posts May 2010 Startup CTO Top 30 Posts for April 16 Great Startup Posts from March There was some really great content in June. liquidation preference.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

genylabs.typepad.com

SEPTEMBER 24, 2011

The Changing Face of Entrepreneurs. The Connected World of Entrepreneurs. Entrepreneur Magazine Blog. Planning, Startups, Stories. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. immigrant entrepreneurs. Categories.

Equity 40

Equity Technical Review San Jose Stock 40

Up and Running

DECEMBER 30, 2015

When raising your first round of capital, there are a few common mistakes many entrepreneurs make. I’ve been lucky enough to screw up by both funding my startup too early and too late. See Also: How to Pick the Right Attorney for Your Startup. ” – via… Click To Tweet. Raising too early or too late.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

Berkonomics

MAY 22, 2014

In most cases, those entrepreneurs choosing to raise capital using PPMs retain specialists (many of whom are lawyers) to write their PPMs – a rather expensive undertaking. Angels, as group of accredited investors funding startup companies, are assumed to meet a Regulation D exemption for purchasing equity in private companies.

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

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 angel then introduces the entrepreneur to his or her wealthy friends and business connections who, based on the good reputation of the referring angel, also invest. All live happily ever after.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112