Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” Suppose the notes converted as if the acquisition were an eligible financing round. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

David Teten

MARCH 14, 2018

Another example is Correlation Ventures ($300M+ AUM), a VC firm which co-invests in financings with at least one other new outside VC. VC is a “get rich slow” business, because most VC Partners will not see a carry check for 5-10 years, after waiting for both liquidity events and for LPs to be paid first.

Private Equity 60

Private Equity Venture Capital Equity Cofounder 60

Steve Blank

JUNE 23, 2016

Second, the leaders of these companies tended to be those who excelled at finance, supply chain or production. But starting in the last quarter of that century and accelerating in this one, a new form of financing – risk capital (angel and venture capital) — emerged. They knew how to execute the current business model.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Berkonomics

APRIL 20, 2023

years before a liquidity event (positive or negative.) Angel investors will always finance many of them. How about the early-stage investors? You might be interested in this data as viewed from the early-stage investor’s viewpoint. Angel investors hold their average investment for 4.5 first appeared on BERKONOMICS.

SBA 62

SBA Angel Investor Early Stage Liquidity Event 62

Women Entrepreneurs Can

NOVEMBER 19, 2022

These firms can provide various services, including financing and business advice. Investors receive a healthy return on investment when the company reaches a liquidity event. However, this also carries the possibility of a high return on investment. They can also help you develop your product and sales channels.

Venture Capital 52

Venture Capital Early Stage Liquidity Event SEC 52

Berkonomics

FEBRUARY 20, 2020

And the process of borrowing money or financing asset purchases can be an eye-opener for those who are not used to today’s lender and seller aversion to grant easy credit. A win-win for the investor and entrepreneur assuming the company does grow and have a liquidity event someday.

Warrant 62

Warrant Liquidity Event Stock Finance 62

Gust

JUNE 7, 2014

The technical term for this is the “liquidation waterfall”, because on a liquidation event (whether good, as in a large buyout, or bad, as in a distress sale, investors (and others) get paid out in a specified order. So, here is the typical payout order, from first to last: 1) Salaries owed to employees.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Steve Blank

JULY 15, 2010

Number of Venture Backed Liquidity Events 1991-2000. Number of Venture Backed Liquidity Events 2000-2010. They’ve created virtual IPO’s for founders and employees via late-stage private financing. During the decade between 1991 and 2000, nearly 2000 venture backed companies went public. Source: NVCA.).

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Berkonomics

JUNE 15, 2017

So be aware that professional investors are in your company for the eventual large profits at the liquidity event. They are your friends only as long as you meet or exceed planned growth and value.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Hunter Walker

MARCH 8, 2014

If you’re graduating this spring and starting a career in tech, I’ve got one piece of advice: go work at a midstage startup (I’ll define that as B/C rounds of financing – eg Twilio, Stripe, Airbnb, Warby). Here’s why: 1.

Liquidity Event 134

Liquidity Event Early Stage Seed Stage Startup 134

View from Seed

MAY 19, 2015

Even if VC financing has been raised, extravagant and wasteful spending by a few founders or company leadership sets the tone for the entire organization. Without a full corporate infrastructure of support, and more importantly, without extensive monetary resources, founders and employees must spend wisely.

Seed Stage 120

Seed Stage Liquidity Event Cofounder Startup 120

Up and Running

SEPTEMBER 19, 2017

Private equity investments are an important part of many startup business’s plans for accelerating growth or providing founders with a liquidity event. That’s because at those levels the business is so small that the likelihood of needing to engage in contractually unanticipated strategic business activities is extremely high.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

YoungUpstarts

MARCH 11, 2015

For example, a valuation is usually needed for tax purposes when a) the company issues stock options for the first time; b) the company has a “material change” in their business such as a new financing; or c) it’s been more than 12 months since the last valuation. Professionalisms business finance business valuation Janet Chase'

Valuation 100

Valuation Stock Options CPA Merger 100

Berkonomics

MARCH 9, 2017

years before a liquidity event (positive or negative.) Angel investors will always finance many of them. You might be interested in this data as viewed from the early stage investor’s viewpoint. Again, quoting the ARI study, angel investors hold their average investment for 4.5 Entrepreneurs will always start new enterprises.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

Hunter Walker

AUGUST 24, 2014

Did I work any less hard the next day because of my liquidity event? It’s for reasons like these that I support getting startup founders some liquidity during their company’s first few years, perhaps as early as Series A financing when appropriate.

Founder 108

Founder San Francisco Liquidity Event LP 108

The Next Web

MARCH 2, 2014

Instead, honestly analyze the company’s business plan and finances to determine whether the business needs to secure outside funding in order to achieve its objectives, and if so, how much. Should we finance with debt or equity? Here are four main questions to keep in mind during the vetting process: 1. Take your time.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

Berkonomics

FEBRUARY 28, 2019

A win-win for the investor and entrepreneur assuming the company does grow and have a liquidity event someday. And the process of borrowing money or financing asset purchases can be an eye-opener for those who are not used to today’s lender and seller aversion to grant easy credit.

Warrant 48

Warrant Liquidity Event Dilution Cofounder 48

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. Closing : Is there a specific date that the convertible debt financing will close, or will there be an open round of seed investment ? 2X/3X, etc.)

Term Sheet 62

Term Sheet Liquidity Event Pre-Money Valuation Warrant 62

Berkonomics

NOVEMBER 1, 2018

Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale. Formal option plans for some.

Stock Options 192

Stock Options Stock Distribution Programming 192

Early Growth Financial Services

JULY 10, 2014

Too often, entrepreneurs neglect planning for and managing personal finances as they focus on building their business, lining up financing, and steering toward an eventual liquidity event. One thing that’s probably not occupying much mind space as you’re building your company is managing your personal assets.

Liquidity Event 41

Liquidity Event Management Stock Options Founder 41

Pascal's View

AUGUST 28, 2010

billion, followed by finance, 19 deals, and healthcare, 17 deals. The biggest industry waiting is computers and electronics with 23 deals seeking to raise as much as $4.8 Private-equity and venture capital firms have been hard hit too.

Venture Capital 56

Venture Capital America Initial Public Offering IPO 56

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) was spun out, and the valuation was set by that financing round.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Hunter Walker

NOVEMBER 20, 2013

3) The Alternate Liquidity Syndicate. Smaller liquidity events can still be valuable to a fund (very dependent upon size, stage and ownership percentage), but if you’re in the venture business, you’re playing into some variation of the ‘swing for the fences’ mentality.

Syndicate 98

Syndicate Syndication South America Cap Table 98

Both Sides of the Table

SEPTEMBER 27, 2010

What micro VCs need to consider is what happens when several of your companies want to grow and require VC financing? Or when the economy turns downward and they all need financing extensions? The hardest thing is deciding what the right time to allow founder liquidity is. It is such a disconnect.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

The Startup Lawyer

JUNE 9, 2010

A startup’s Series A financing shouldn’t be a large liquidity event or salary payday for the startup’s founders. While a startup typically receives millions of dollars in a Series A, if too much of that $$$ flows guaranteed to the founders, various incentives get out of whack. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

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. But you also can’t run the company forever, since investors need a liquidity event. Most founders who are raising capital look first to traditional equity VCs. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Growthink Blog

JANUARY 13, 2013

Enacting a liquidity event. Suggested Resource: In Venture Capital Pitch Formula , you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentations, and how to secure your financing. Here's how VCs earn returns for their investors: 1. Finding high growth companies 2.

Venture Capital 92

Venture Capital Angel Investor Liquidity Event Term Sheet 92

ithacaVC

DECEMBER 14, 2011

Yes, it is possible to issue preferred stock without liquidation preference, but that is rarely done. Rather, preferred stock has the right upon a liquidation event to get its money back (a 1X LP) or, sometimes, a multiple of its money back (for example a 2X LP). Ok, enough of the background. million balance. ($3

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Growthink Blog

SEPTEMBER 9, 2011

VCs earn returns for their investors by finding high growth companies, making investments in them at favorable terms, guiding and nurturing them, and enacting a liquidity event (e.g., By providing a solid ROI to their investors, VCs earn bonuses and raise more funds so they can stay in business. This video explains more. read more.

Venture Capital 114

Venture Capital Liquidity Event Initial Public Offering Term Sheet 114

A Crowded Space

AUGUST 26, 2013

Let’s look more broadly at later-stage equity financing. Equity crowd-funding as a broad asset class is similar to VC in that it seeks to take a stake in early stage startups and hope for big liquidity events down the road. Raising money on a website surrenders your secrecy. Later Stages. Conclusion.

Later Stage 87

Later Stage Liquidity Event Equity Vertical 87

Berkonomics

JANUARY 27, 2010

So be aware that professional investors are in your company for the eventual large profits at the liquidity event. They are your friends only as long as you meet or exceed planned growth and value.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

The Next Web

OCTOBER 7, 2013

What you need to consider: - x : percent ownership upon a liquidity event. As stated earlier, investors will dilute ownership upon nearly every round of financing. Again this is somewhat simplified as the liquidity event (sale or IPO) may come as cash, stock, or a combination of the two. How much do they cough up?

Engineer 129

Engineer Dilution Option Pool Vesting 129

Up and Running

DECEMBER 6, 2010

You could also call it a liquidity event. So I suggest that we agree on the following about exit strategies: The exit is about money. Converting ownership, as in shares of ownership, into money. It’s not about going from one place to another. What exits is the money. Money exits. Investors exit with it.

Exit Strategy 71

Exit Strategy Liquidity Event Early Stage Entrepreneur 71

Growthink Blog

MAY 13, 2012

And they'll want to invest if they believe your company has great potential to achieve a liquidity event, and one that enables them to earn a significant return on their investment. You prepare by making sure angel investors will want to invest in your company. This angel funding video explains more. read more.

Angel Investor 93

Angel Investor Exit Strategy Liquidity Event Angel Groups 93

The Next Web

SEPTEMBER 29, 2013

It should never be the financing event that dictates whether to shift or not. Investors are always thinking about growth mode because that’s the path to where they want to go – liquidity event. But without figuring out all the stuff we talked about above, you can’t spend responsibly. How do you do that?

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Berkonomics

APRIL 3, 2014

We’ve spoken of financing a young company through friends and family, known as “inside angels.” VCs often invest no less than $2 million in a single deal, finding it difficult to put less money to work and still spend time on boards and coaching entrepreneurs to a successful liquidity event. Raising money'

Equity 92

Equity Finance Liquidity Event Angel Groups 92