Startup Professionals Musings

AUGUST 16, 2015

Angel and venture capital money always comes with ownership and management implications, starting with the obvious ones outlined in the term sheet for the deal. Progress milestones become management objectives. Funding can be pulled, and future distributions withheld, if objectives are not met.

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

Both Sides of the Table

JANUARY 21, 2010

How to manage costs - One of the biggest frustrations that people have with lawyers are unexpected costs. You need to know how liquidations preferences work. He was the first guy that I saw demystify the legal terms in his term sheet series. In every firm there are A, B and C players. And Brad Feld.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Altgate

JANUARY 5, 2009

Share and Enjoy: This entry was posted in Current Affairs , Entrepreneurship , Green Business , Management , Startups , Technology , Venture Capital , Venture Debt and tagged top posts. Tips: $75 Killver VC Pitch Deck Not much to learn here. Although in 2008 I did learn that this is called a “ sneeze page.&# Who knew?

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28

www.founderinstitute.com

MARCH 2, 2010

The Lab manages the shared operational needs of its member organizations, allowing them to better focus on mission and execution. Chris Dixon posted about an ideal term sheet for first round funding, which started an blogosphere discussion about terms. This is a downside protection term.

Term Sheet 40

Term Sheet Liquidation Preference Vesting San Diego 40

Professor VC

APRIL 1, 2010

I had a discussi on with another angel investor a few months ago and he was bragging about the deal he just struck that included a 3X participating liquidation preference. There has been a lot of discussion and publishing of standard term sheets, including Y Combinator, TechStars and SeriesSeed. Steve Bennet. at 11:15 AM.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

Both Sides of the Table

JULY 19, 2011

This is the skilled bit that you can’t effectively manage. They know what is “market&# for your recruits in terms of base, bonus & stock options. Lawyers : So you got your big term sheet signed and you’re now in the drafting. They’re also good at screening candidates.

Term Sheet 319

Term Sheet PR Liquidation Preference Stock Options 319

Up and Running

DECEMBER 30, 2015

Founders should pay attention to the liquidation preference in the term sheet to ensure it does not become detrimental to them in a less than favorable exit. We now structure time for due diligence to manage expectations appropriately. – Carrie Rich, The Global Good Fund. Better yet, get legal counsel.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

ithacaVC

MAY 4, 2011

It typically is used in the context of someone (often a VC) attempting to change deal terms between a signed term sheet and the closing of the investment. The typical time between term sheet signing and closing is 45 – 60 days so there is ample room (unfortunately) to revisit issues. So, what to do about it?

Term Sheet 49

Term Sheet LP Ratchet Liquidation Preference 49

Both Sides of the Table

SEPTEMBER 2, 2009

The VCs basically have liquidity in management fees along the way, in the sense they get paid decently along the way. I know that eventually if your company is out of cash and you need the money you’ll take it even on punishing terms. We managed the business because we felt responsible since we raised money.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Feld Thoughts

FEBRUARY 28, 2023

In addition, there are the managing directors as executive bodies. In the VC sector, it is common to introduce a third body in addition to the shareholders’ meeting and the management. The shareholders are represented there and usually have voting rights in proportion to their shareholdings. Both samples are bilingual.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

ithacaVC

APRIL 25, 2012

In my view, starting off a VC relationship by diving into perhaps the most critical economic term is kind of like, well, moving too fast on a first date. So, my suggestion is to not bring up pre-money valuation unless (i) asked by the VC or (ii) the relationship has matured to a point where you can sense that a term sheet is likely.

Valuation 49

Valuation Pre-Money Valuation Liquidation Preference Preferred Stock 49

Altgate

MARCH 17, 2009

The two most popular posts remain this one on term sheet negotiation and this one on venture debt , although this one on convertible debt is giving them a run for their money. Tips: $75 HOT All-Hands Team Meeting NEW Board Management Tips For Startup CEOs Customer Support 2.0

Term Sheet 28

Term Sheet Due Diligence Liquidation Preference Dividend 28

abovethecrowd.com

APRIL 20, 2016

These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. We have already seen examples of founders and management obtaining liquidity in front of investors. The Sharks Arrive With Dirty Term Sheets. Dirty term sheets are a massive problem for two reasons.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Startup Company Lawyer

JANUARY 9, 2011

Tweaking convertible debt so that common stock (instead of preferred stock) is issued for the conversion discount in order to limit liquidation preference overhang. Convertible debt with a price cap preserves the investor’s “equity&# ownership, but gives the investor extra liquidation preference.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Feld Thoughts

JULY 14, 2015

The term sheet converts all the convertible debt into a post-money valuation of $100, essentially making the convertible debt worthless. The founders usually get wiped out completely, but existing management usually ends up with new options for between 10% and 20% of the company. So they recapitalize the company.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Both Sides of the Table

FEBRUARY 14, 2016

When I was an entrepreneur there was no public information about how term sheets worked or how investors thought. The billions of dollars managed by mutual funds, hedge funds, insurance companies, university endowments, pensions, foundations, sovereign wealth funds and the like need to find returns for their money.

Valuation 150

Valuation Down Round Startup Later Stage 150

Austin Startup

APRIL 1, 2017

out of state VCs Don’t rush a term sheet In assessing financing terms and interacting with their lead investors, most founders instinctively focus on two core things: economics and control. Do not take that selection lightly. Background Reading: How to avoid “captive” company counsel Local v. Skillset trumps geography.

Term Sheet 48

Term Sheet Institutional Investors Technical Review Lead Investor 48

Life Beyond Code

SEPTEMBER 27, 2011

Once the $1 million revenue milestone is crossed, entrepreneurs find it easier to find additional customers, manage working capital, and access funding, whether it is credit or equity. This is where numerous ventures fail.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

Up and Running

MARCH 29, 2017

After a great first year, I did my summer internship at Google as a product manager. The idea for ZipBooks came right before my final semester at HBS, and stemmed from my own experiences as a business owner—I knew firsthand about the headache that comes from managing the cash flow of a small business.

Term Sheet 60

Term Sheet Venture Capital Liquidation Preference Valuation 60