Startup Professionals Musings

AUGUST 29, 2018

According to Yahoo Finance , less than a third of crowdfunding campaigns currently reach their goals, and the rest have to return anything they do collect. Payoff after a liquidity event is difficult and unpredictable. That exceeds the amounts contributed in the U.S. by either angel groups or VCs alone.

Equity 180

Equity Due Diligence Angel Groups Liquidity Event 180

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

Gust

SEPTEMBER 5, 2012

How to finance a new seed-stage startup? ” Ressi in particular seems to be passionate about removing the “debt” component from convertible debt seed financing transactions. .” I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For

Finance 134

Finance Convertible Security Equity Seed Stage 134

Up and Running

SEPTEMBER 19, 2017

By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable. The right-of-first-refusal clause, however, proved a significant impediment in his attempted sale of stock to the industry insiders. Conclusion.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Berkonomics

APRIL 20, 2023

The Angel Capital Association recently published a study contributed to by several of my friends quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die.

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. They can also help you develop your product and sales channels. Investors receive a healthy return on investment when the company reaches a liquidity event. Seed funding is usually used to support product development, sales, and marketing.

Venture Capital 52

Venture Capital Early Stage Liquidity Event SEC 52

Gust

JUNE 7, 2014

Every investment round in a company is made on the basis of extensivepaperwork (often upwards of 100 pages in total) specifying *precisely* what happens when it comes time to pay out the proceeds (if any) from the sale or dissolution of the company. 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

Berkonomics

JUNE 15, 2017

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. So be aware that professional investors are in your company for the eventual large profits at the liquidity event.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). Conversely, if you’re not a good picker, it’s difficult to overcome that, even if you had perfect timing on secondary sales.

Venture Capital 122

Venture Capital Cap Table LP Equity 122

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. I found myself in such a situation upon a sale of my computer software company. Formal option plans for some.

Stock Options 192

Stock Options Stock Distribution Programming 192

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. If you’re starting a software company, your exit is most likely a sale to a larger company. Source: NVCA.).

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Berkonomics

MARCH 9, 2017

The Angel Resource Institute (ARI) recently published a study conducted by well-respected Rob Wiltbank, quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

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

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

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). For you who fit that description, nice work. There is a lot to say about retaining control.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

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. In addition, here’s an example of how a startup CEO’s huge salary didn’t help his startup: CEO’s $500,000 Salary Burns Startup Into Fire Sale. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. By the first quarter of 2016, the late-stage financing market had changed materially. Investors were becoming nervous and were no longer willing to underwrite new Unicorn-level financings at the drop of a hat. This is uncharted territory.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Berkonomics

JANUARY 27, 2010

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. So be aware that professional investors are in your company for the eventual large profits at the liquidity event.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

Seeing Both Sides

SEPTEMBER 15, 2015

We selected this benchmark because it reflects the phase in which companies have proven product viability, achieved initial product/market fit, and are now expanding sales and growing more complex operations. In the old model of Israeli startups, many Israeli executive teams would hire a vice president of sales in the U.S.

Cofounder 20

Cofounder Technical Review United States 20

www.vccafe.com

MARCH 11, 2013

Event platforms. turn customer feedback into sales and relationships. easy business finance software. YCombinator Series AA Equity Financing Documents. SaaS Sales Team Compensation â?? Startup Threads. Videos/presentations. SlideShare. Haiku Deck. GoAnimate *. Customer service. Get Satisfaction. Eventbrite.

Software Review 53

Software Review Technical Review Startup 53

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

MAY 13, 2012

But, when one of these factors are "out of whack," it can be a much tougher sale to make. 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. Getting funding from angel investors is the same way.

Angel Investor 93

Angel Investor Exit Strategy Liquidity Event Angel Groups 93

The Next Web

SEPTEMBER 29, 2013

You’re basically tinkering with everything at this stage – product, marketing, sales, partnerships, etc. You’re tinkering with your marketing and sales channels. It should never be the financing event that dictates whether to shift or not. You’re learning who your customers are and what they expect. How do you do that?

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For you who fit that description, nice work. There is a lot to say about retaining control.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. Flippers financed by venture capitalists are more likely to hire executives having high level profiles and previous exit experience.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Berkonomics

AUGUST 13, 2015

If you have professional angels or venture capitalists among your funding sources, you have probably been focused on your company’s sale well before they wrote their first checks. Cash spent on activities which do not burnish your attractiveness is cash squandered as you prepare for the sale. That premium is your focus.

Ohio 48

Ohio Acquisition Forecast Sales 48