Both Sides of the Table

SEPTEMBER 29, 2013

It’s hard to be a great lead investor . VCs take their time precisely for the reason Fred articulates – they play the role of “lead investor.” lack of traction, lack of downstream financing availability. They will have to help get the next round done. Essentially they will have to work. .

Syndicate 356

Syndicate Syndication Cofounder Early Stage 356

View from Seed

JANUARY 27, 2021

100M is a meaningful increase from our $50M third fund, though it’s still quite small in the grand scheme of venture, especially amid the recent wave of late stage financings and SPACs. This is a fresh $100M fund with the same high-conviction, hands-on seed strategy that we’ve been pursuing since the start of NextView over 10 years ago.

LP 411

LP Early Stage Seed Stage Venture Capital 411

ithacaVC

MARCH 9, 2017

Sometimes at the seed stage, the company founder insists that he/she be the only board member and that once more financing is raised that the board composition will be normalized (code word for “adding more members”). We followed in line with the lead investor and went along with the structure.

Seed Stage 58

Seed Stage Software Review Institutional Investors Lead Investor 58

ReadWriteStart

FEBRUARY 19, 2020

Colombia has a few industries with massive potential for disruptive transformation , in particular, health and finance. Though still in early funding stages, Truora left Y-Combinator with regional investors Magma Partners and Kaszek Ventures, and foreign investors Y-Combinator and Accel. Industry gaps. Ayenda Rooms.

Colombia 146

Colombia America Technical Review Startup 146

View from Seed

FEBRUARY 26, 2020

In previous blog posts I’ve written about the two main approaches to building a seed round syndicate – the subscription method (where an entrepreneur presets a structure with a convertible note or SAFE and recruits investors who subscribe to the round, all without a term-driving lead investor) and a term-driving lead investor approach.

Syndicate 257

Syndicate Syndication Lead Investor Venture Capital 257

View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Also, sharing some flavor (but not necessarily full detailed specifics) of the existing investor-set adds context.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

View from Seed

FEBRUARY 23, 2021

The average investor is fairly harmless, and even if they aren’t as helpful as one would hope, they rarely create major headaches. What you sometimes lose is the strength of the syndicate to support the company in the future if intermediate financing is needed.

Syndicate 207

Syndicate Syndication Term Sheet Cofounder 207

Both Sides of the Table

SEPTEMBER 23, 2010

Asked to respond to the topic, “What collusion happens with AngelList, if any&# I wrote the following: “Um, let’s not be naive here and not think that a “form of collusion&# doesn’t happen on virtually any financing round. Investors talk to each other. How well financed is the competition?

Entrepreneur 292

Entrepreneur Technical Review Stealth Valuation 292

Gust

SEPTEMBER 27, 2014

To begin with, it is important to understand some basic facts about the world of entrepreneurial finance: There are many more entrepreneurs than there are investors, with the result that only one company out of every 400 that seeks venture funding actually receives it.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

This is going to be BIG.

MAY 4, 2022

I’m a straight white dude who grew up in NYC and worked in finance. How competitive is your company going to be in the race to recruit the best women on the market (women—the segment of the talent market who hold the majority of new college degrees) when your lead investor is a top donor to an anti-choice org?

Cap Table 163

Cap Table Cofounder Private Equity Finance 163

Hunter Walker

SEPTEMBER 12, 2022

And while I passed on leading their seed, I did contribute a smaller amount into the financing, along with three subsequent pro rata/super pro rata investments.

Cofounder 96

Cofounder Lead Investor Founder Restful 96

View from Seed

FEBRUARY 12, 2020

This question helps an investor assess a deal’s level of competitiveness as well as the likelihood that it falls into a zone that the investor would consider reasonable. The tricky part of this discussion is that existing investors often aren’t that crisp about what they want to do in the new round.

Term Sheet 364

Term Sheet Burn Rate Founder Partner 364

David Teten

SEPTEMBER 5, 2014

Like many established finance & media companies, GLG knows that the tech startup sector is a growing part of the economy. Over the past 15 years we’ve built this amazing membership to serve our core clients – leading investors, corporations, consulting firms, and nonprofits. Or, you can go straight to the source.

New York 114

New York Technical Review Networking Advisory Board 114

Pascal's View

JULY 9, 2017

At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. When it comes time to convert the notes, these entrepreneurs face ‘sticker shock’ about their post-financing ownership.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

www.xconomy.com

JUNE 9, 2012

Coats says the VC firm spent more than six years and invested millions of dollars to compile a database of key variables from more than 60,000 venture financing deals covering roughly 98 percent of all U.S. Morgan Stanley was a lead investor,” Coats deadpans, “and we had to start fund-raising all over again.”

San Diego 40

San Diego Venture Capital Technical Review San Francisco 40

OnlyOnce

JULY 26, 2018

Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table. On the other side, what’s an example of a “good” loss?

Cap Table 61

Cap Table Lead Investor Valuation Reputation 61

The Equity Kicker

DECEMBER 3, 2012

Chris Dixon wrote an interesting post yesterday which described two different ways of thinking about startup opportunities – the finance lens and the product lens. whilst investors typically look at opportunities from an investment perspective, asking the question ‘is there an opportunity to make a lot of money from this investment?’.

Finance 116

Finance Valuation Lead Investor Startup 116

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. The right lead investor and the right amount of cushion in a raise can help with the best defense against scaling disaster—hiring.

Dilution 104

Dilution Equity Hiring Partner 104

Genuine VC

JULY 30, 2012

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndicate 136

Hunter Walker

JANUARY 19, 2023

Can any transition to a venture-financed for profit be truly Open? But is throwing money (and frankly the importance of their brand, which right now is red hot) into startups a lead investor really Open? The company you keep does impact behaviors, no? Is this a new model or just a new FAANG?

Naming 62

Naming Lead Investor Distribution Technology 62

Scott Edward Walker

JUNE 9, 2019

Over the past few weeks, two of my clients have received financing term sheets in which the investors requested super pro rata rights. Simply put, pro rata rights permit the investor to maintain its percentage ownership in subsequent financing rounds. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

SiliconHills

JANUARY 31, 2017

ATX Seed Ventures announced it is the lead investor in GoCo’s $2.5 million financing round. Other investors included Guardian Life Insurance and Salesforce Ventures. GoCo.io, based in Houston, is a software startup that provides an all-in-one Human Resources platform focusing on small to medium sized companies.

Houston 48

Houston Lead Investor Finance Software 48

OnlyOnce

JULY 26, 2018

Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table. On the other side, what’s an example of a “good” loss?

Cap Table 48

Cap Table Lead Investor Valuation Reputation 48

View from Seed

OCTOBER 21, 2014

Sharing these pricing expectations early with potential lead investors fundamentally qualifies your conversations, but it also runs the risk of prematurely losing a potential financing partner, or else it can reduce options to maximize your fundraise outcome.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. So you can see why this leads to a lot of tension and misunderstanding. It’s very simple.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

View from Seed

JANUARY 26, 2016

There are a number of factors that have contributed to the rise of pre-seed rounds, but the strongest have been the frothy late-stage financing market, coupled with both the scaling-up of some of the early winners in the institutional seed ecosystem and the scaling-down of some larger funds that retrenched after the financial crisis.

Seed Stage 120

Seed Stage Early Stage Cofounder Finance 120

Hunter Walker

JANUARY 10, 2022

Homebrew was on the board of a construction tech startup called BuildingConnected , having led their seed financing. The needs of the lead investor for ownership? A round that is most accommodating for the existing investors while allowing you to get new people involved? You want to tell people how we originally met?

Cofounder 89

Cofounder Founder Acquisition Startup 89

The Startup Magazine

AUGUST 18, 2017

The opening keynote session will define directions on Aligning the Role of Government Policymakers, Incumbent Banks, FinTech Innovators, Investors, Multilateral Agencies, MNOs and the Private Sector to Create a Dynamic Ecosystem for FinTech in Africa.

Africa 62

Africa Ethiopia Elevator Pitch Technical Review 62

www.seriesseed.com

DECEMBER 9, 2012

Series Seed Financing Documents Blog.   That’s because there are not that many issues to negotiate in a simple equity financing. Have you had anyone from Canada use these documents for financing a Canadian (Quebec) entity? One issue I do have with the term sheet though is the provision for $10K in investor legal expenses.

Term Sheet 40

Term Sheet Ratchet Dilution Equity 40

Genuine VC

JULY 10, 2012

There are essentially two distinct basic strategies for startup entrepreneurs to raise a seed round of capital: Subscription approach – An entrepreneur sets a structure (usually a convertible note) and recruits individual angel investors who subscribe to the round, all without a term-driving lead investor.

Syndicate 207

Syndicate Syndication Seed Stage Portfolio 207

Feld Thoughts

DECEMBER 15, 2016

Instead, there is no formal board, or no formalism around the board, so it’s just a free for all between the collection of early investors (angels and pre-seed/seed VCs) and the founders. This can be fine, but often isn’t when there are challenging issues that involve founders, financing, execution, or conflicts.

Sales 70

Sales Seed Stage Early Stage Finance 70

BeyondVC

SEPTEMBER 13, 2006

Make sure your basic finances are in order and that all customer contracts, employment-related documents, financing paperwork, etc. It is quite simple to overlook this aspect of your business but taking care of your company and keeping your house in order is easy to do, especially if you start from Day 1.

Technical Review 60

Technical Review Intellectual Property Cofounder Due Diligence 60

Austin Startup

MAY 8, 2012

Silverton Partners was the lead investor and is joined by a group of new venture and corporate investors including Webb Investment Network, the investment fund of former eBay COO Maynard Webb, and several private investors including Asana executive Kenny Van Zant; bringing total financing to $4.1M.

Lead Investor 67

Lead Investor Analytics Cloud Finance 67

Hunter Walker

APRIL 20, 2018

Like we do at the seed stage, USV almost always plays the role of “ lead investor.” ” And later: “The truth about these situations is a few seed investors will massively over deliver and the rest will massively disappoint.” But it often is not.”

Seed Stage 48

Seed Stage Lead Investor Portfolio Reputation 48

View from Seed

JANUARY 11, 2021

In a world where a focus on founder track record and network became increasingly pervasive, how could new founders effectively break in and obtain early financing? Join online networks, reach out to investors over Twitter, and expand your community.”.

Venture Capital 350

Venture Capital Cofounder Early Stage Seed Stage 350

Hippoland

JANUARY 4, 2017

Usually, an equity round is kicked off by a “lead investor”. Typically, this lead investor decides the terms of the round and also invests the majority of the money that will go into your company. That lead investor will also usually help you fill out the remainder of your round with other investors.

Convertible Security 48

Convertible Security Equity Security Silicon Valley 48

Feld Thoughts

AUGUST 2, 2010

This prompted me to write a post titled AngelList Boulder and Some Thoughts on Seed Investing where I promised to write up some of my thoughts on how and why VCs could be good seed investors. They are: Fred Wilson: Lead Investors, Dipshit Companies, and Funding Every Entrepreneur. Tags: Seed Financing seed VC.

Angel Investor 152

Angel Investor Cofounder Syndicate Syndication 152