Scott Edward Walker

JULY 20, 2011

Introduction I’ve been doing deals as a corporate lawyer for 17+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs make over and over again. It is critical that entrepreneurs understand this dynamic. Accordingly, I thought it would be helpful to share three basic tips in connection with doing deals.

Private Equity 78

Private Equity Liquidation Preference Option Pool Entrepreneur 78

Both Sides of the Table

JULY 25, 2011

tl;dr version: If you’re an entrepreneur or VC or will be working in this industry - buy this. When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Or what “participating preferred&# stock is and how it can screw you. This article originally ran on TechCrunch.

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Liquidation Preference Term Sheet Cap Table Participating Preferred 304

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

Feld Thoughts

JUNE 10, 2022

So, as an entrepreneur, I encourage you to deal with reality. Rather, when you have a choice between a financing at a lower valuation and a financing with all kinds of crazy structure to try to maintain a previous valuation, negotiate the best price you can but do a clean financing with no structure. and a bunch of other things.

Down Round 162

Down Round Ratchet Liquidation Preference Participating Preferred 162

Both Sides of the Table

MAY 13, 2013

And a few teams of super talented, educated and bright entrepreneurs make a few mill. Almost certainly the startup would have raised some capital. If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If

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Liquidation Preference Early Stage Retention Lock-up Period 357

The Equity Kicker

JANUARY 18, 2013

If you’ve been paying attention you will know that Nicholas Lovell and I are writing a book for entrepreneurs who want to raise venture capital. What on earth does this termsheet mean with it’s liquidation preferences, anti-dilution and protective provisions? It’s tentatively titled Get Funded.

Liquidation Preference 159

Liquidation Preference Venture Capital Dilution Video 159

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

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. If the entrepreneur wants total control of their own venture, with no one looking over their shoulder, they should work within the limits of their own resources, a process called bootstrapping.

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

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. Angel and venture capital money always comes with strings attached, starting with the obvious ones outlined in the term sheet for the deal. You can’t keep bad news secret.

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Term Sheet Advisory Board Liquidation Preference Startup 237

K9 Ventures

JUNE 5, 2015

The Venture Capital industry as a whole does a terrible job of giving things the right name and so we end up keeping the same name, but changing the meaning out from under it. Scaling venture capital breaks it. Venture capital is, and should remain, a boutique industry (See The Venture Boutique , blog post from 2008).

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

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). My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A under $500K). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? 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.

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Liquidation Preference Valuation Term Sheet Stock 153

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

Growthink Blog

JANUARY 24, 2011

I get the same question a lot from entrepreneurs raising equity capital (venture capital or angel funding). The question is whether they need to issue common or preferred stock. The answer depends on how and what rights are defined in the preferred stock. read more.

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

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

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. Preferred shares are not possible with a limited liability corporation (LLC), so expect to convert to a C-corp to get an equity investment. Investor liquidation priority.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

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. If the entrepreneur wants total control of their own venture, with no one looking over their shoulder, they should work within the limits of their own resources, a process called bootstrapping.

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

David Teten

AUGUST 21, 2019

Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? BJ Lackland, CEO of Lighter Capital, observes that RBI-backed founders “want to maintain control, ownership and optionality. These entrepreneurs want to maintain two major options: 1) To raise VC later (or not), and/or.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

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! Bookmark the permalink.

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28

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. Then use the down round to clean up your preference overhang. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

genylabs.typepad.com

SEPTEMBER 24, 2011

The Changing Face of Entrepreneurs. The Connected World of Entrepreneurs. Entrepreneur Magazine Blog. Even the best venture capital firms have a lot of failures and few successes. where your stock sits in the liquidity preference stack. immigrant entrepreneurs. Disclosure Policy. OReilly Radar.

Equity 40

Equity Technical Review San Jose Stock 40

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

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

Both Sides of the Table

NOVEMBER 4, 2009

I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X&# or not. BTW, this ignores liquidation preferences which actually mean you’ll earn less. Tags: Entrepreneur Advice Startup Advice. This is part of my Startup Advice series.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

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. Venture News.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

Scott Edward Walker

SEPTEMBER 14, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. Indeed, some very pro-entrepreneur investors, like Fred Wilson , do not require no-shop provisions (see rule #4 in Fred’s post “ Competing To Win Deals ”).

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

Scott Edward Walker

APRIL 9, 2012

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. Introduction We are in the golden age of seed financing.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Both Sides of the Table

SEPTEMBER 2, 2009

A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal. We exchanged ideas when I was an entrepreneur along side him in NorCal in 05-07 and my point-of-view on founder / VC relationships hasn’t shifted even 1% since I went to the dark side. I believe this is wrong.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

ithacaVC

FEBRUARY 13, 2013

So God Made a Venture Capitalist! And on the 8th day God looked down on his planned paradise and said, “I need a caretaker for all those entrepreneurs – the crazy ones!” So, God made a venture capitalist (VC)! He is the author of “The Business of Venture Capital”, and co-author (with Brad Feld) of “Startup Boards”.

Liquidation Preference 55

Liquidation Preference IRR Due Diligence LP 55

Spencer Fry

APRIL 17, 2017

Having started and sold 3 successful bootstrapped businesses, and am now running 1 venture capital backed business ( Coach ), this is a topic I know a thing or two about. 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

SoCal CTO

JULY 13, 2010

10 Ways To Be Your Own Boss - A VC : Venture Capital and Technology , June 18, 2010 The folks at Behance and Cool Hunting asked me to talk at their 99% Conference a couple months ago. 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

Professor VC

JULY 25, 2013

Mike Markkula presenting Steve Jobs with first investment in Apple I recently watched an excellent documentary on PBS, Something Ventured: Risk, Reward, and the Original Venture Capitalists. This is the feeling you get from watching the venture capitalists talk about the entrepreneurs and other investors in the film.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

Pascal's View

DECEMBER 30, 2012

While every company founder makes trade-offs in building a company, few entrepreneurs appreciate the far-reaching implications of several critical decisions they will are required to make at the outset of a startup’s evolution. Many of these issues come to the foreground once entrepreneurs have raised money from VC’s.

Cofounder 34

Cofounder Liquidation Preference Vesting Equity 34

crowdSPRING Blog

MARCH 13, 2014

9 Ways Entrepreneurs Can Learn From Their Customers – crowdspring.co/1loBthB. Guerilla tips for raising venture capital | VentureBeat – crowdspring.co/P6hM3O. Good read for entrepreneurs & startup employees on liquidation preferences – crowdspring.co/1neVvzy.

Social Media 96

Social Media Small Business Design Media 96

Altgate

MARCH 17, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Global Nuances of Startup Compensation Obama Shoots Down 90% Tax Bracket → Popular Posts Posted on March 17, 2009 by fnazeeri Once again, here is a list of some of the more popular posts on this blog.

Term Sheet 28

Term Sheet Due Diligence Liquidation Preference Dividend 28

Both Sides of the Table

MARCH 3, 2013

We talked about how business school historically hasn’t positioned entrepreneurs well for success. I wrote about that before in a post about “ whether MBAs are necessary for entrepreneurs. His class reading lists could be a primer for any entrepreneur, not just MBAs. Venture Capital.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

Gust

MAY 24, 2012

Yet I’m skeptical that a widespread shift will occur anytime soon, and for reasons discussed below, as much as I admire and advocate for talented entrepreneurs, I believe it would be a losing proposition for nearly all involved. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159