Mentors 5/18: Listen Too

Feld Thoughts

I don’t go so far as to “think out loud” like some people I work with, but I regularly find myself talking too much and have to consciously ratchet it back to listen.

The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand

Both Sides of the Table

Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. The key for entrepreneurs to understand is whether it’s a “full ratchet” or a “weighted average ratchet.”

Should I give my seed investors anti-dilution protection?

Gust

What this investor is seeking is called “permanent, full-ratchet, anti-dilution protection”, and that is neither (a) in line with the market, nor (b) practical. Even if you were willing to give it to him, it is highly, highly unlikely to stand up beyond the next financing round, because there’s no way your next investor is going to take a dilution hit for this first one. That’s why anti-dilution provisions are typically only applicable to the next financing.

5 Tips For Stress-Free Business Travel

YoungUpstarts

You always feel as if you’re going to forget something, which puts you on high alert and ratchets up your stress level. “If As an entrepreneur who has goals of growing a startup into a flourishing business, networking plays a catalytic role in accomplishing key objectives.

On the Square and Match IPOs and hopes for a correction

The Equity Kicker

They had a ‘ratchet’ which repriced their investment in the event of a down round to give them a 20% return. Match.com and Square both enjoyed strong first days after their IPOs yesterday. Match closed up 23% at a valuation of $3.5bn and Square was up 45% at a valuation of $4.2bn.

Walker Twitter Highlights: November 9th – 29th

Scott Edward Walker

” A few solid responses: [link] “The only folks that win on this are the later stage investors who get the benefit of the ratchet…“ – @weschan [link]. I’m using Twitter as a form of micro-blogging to share interesting articles, blog posts and video clips relating to startups, entrepreneurship and legal issues. Below are my five most popular tweets (via bitly ) for the past three weeks.

One Simple Paragraph Every Entrepreneur Should Add to Their Convertible Notes

Both Sides of the Table

This is called a “full ratchet,” which is also historically a term that VCs would be crucified for trying to get away with but I’ll avoid talking about that in this post.]. I’m so tired of seeing young entrepreneurs get screwed by their angel investors on convertible notes and I know I can’t convince you not to do it so I’d like to offer one simple bit of advice to help you avoid getting screwed (at least on one part of your note).

Founders – Use Your Down Round To Clean Up Your Cap Table

Feld Thoughts

I’ve seen every imaginable type of liquidation preference structure, pay-to-play dynamic, preferred return, ratchet, share/option bonus, option repricing, and carveout. Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. Go read it now – I’ll wait.

3 Ways To Make In-House Filing Less Taxing

YoungUpstarts

If your startup is eyeing international expansion early on, your tax compliance and planning needs, both home and abroad, immediately ratchet up. by Anjum Tunuli, c hief tax officer at Early Growth Financial Services.

[Singapore] Shopify Partners SingTel To Grow Presence In Singapore

YoungUpstarts

The e-commerce space in Singapore has been ratcheted up by another notch as online shopping platform Shopify partners telecommunications provider SingTel to make available its services to businesses in the country.

Accepting Outside Investors? Here Are 5 Things to Watch Out for in Your Contract

Up and Running

The version of “anti-dilution protection” that most benefits outside investors is commonly called a “full ratchet.” As a middle ground on the “anti-dilution clause” you should be pushing for what’s called a “partial ratchet.”

Economics In Asia In The Trump Era

YoungUpstarts

White House advisers warned that additional trade measures related to steel, aluminum and other products from China could be coming, a signal that Mr. Trump is ratcheting up the protectionist policies he has long espoused as part of his “America First” approach.

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Investing Notes From The Inaugural Pre-Seed Summit

Haystack

I would bet most of them can barely cut through the flow, and then they have to find the best deals and look over their shoulder for a larger VC who can pick off the deal, give the founder more money, and ratchet up the valuation in the process. Earlier today, the folks from Afore Capital hosted their inaugural “Pre-Seed Summit” in San Francisco. About 150 people showed up, a healthy mix of founders, seed-stage investors and big fund VCs, and a bunch of LPs of various sizes.

The writing is coming

Jeff Hilimire

Anyway, just thought I’d check in and say, sorry the content hasn’t been quite as consistent lately, but it’s for a good cause and I expect to ratchet back up…that is, until the Dragon Army blog is set up next week and then I’ll be writing there as well.

Inspired Ideas to Boost Employee Productivity During the Holidays

Up and Running

Ratchet up your company’s social networking posts. The busy holiday season can make it hard to stay focused at the office. Here’s how to keep your team productive during the holidays.

How to Keep Your Team Productive Around the Holidays

Up and Running

Gather your thought leaders together for a discussion of what you can do in the coming 12 months to ratchet up sales and blow the roof off your revenue stream. With the holiday season approaching, it can be hard to keep the office productive.

Transcript of Increase Your Focus and Combat Distractions

Duct Tape Marketing

A lot of that involves ratcheting down how stimulated we are by default because I think you got it right. It’s a simple tactic but it’s a way of ratcheting down how often you check.

Bad Notes on Venture Capital

Both Sides of the Table

At an accelerator … 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. This week. On the phone … Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price?

So You Wanna be a VC?

Professor VC

I can just picture Mr. Rogers saying "Children, can you say participating preferred stock with an uncapped 3x liquidation preference and a full ratchet?" Opening Day Barron Park Elementary School (9/8/98) "Make new friends, but keep the old. One is silver, the other is gold.

What To Do When Your Trusted Employees Defect To The Competition

YoungUpstarts

But even worse than the cost of recruiting someone new to fill the vacancy when a key employee leaves, there’s one big, looming worry that’s sure to ratchet your anxiety up to critical levels: “She knows everything!”

Bad Notes on VC

Gust

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. This week. On the phone …. Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price? Him: It wasn’t priced. We raised a convertible note. Me: With a cap?

Introducing New Lean Startup Practitioners

Startup Lessons Learned

Each MVP is like a ratchet tooth or belay anchor that keeps the work from going backward, while enabling me to generate greater momentum for the next, more ambitious reach.” Guest post by Lisa Regan, writer for The Lean Startup Conference. In building the program for this year’s Lean Startup Conference , we’ve tried to strike a balance.

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CA Venture terms starting to recover

Fred Destin

There was a Participation feature to the Liquidation Preference in 53% of cases Anti-dilution in the Bay Area is 97% of the time of the mild form (weighted average, not detailed by type), with only 3% of deals involving full-ratchet (a message to European entrepreneurs here!). Fenwick & West's venture barometer always provides useful insights into terms used in venture financing in Silicon Valley / the Bay Area.

Three Ways PR and SEO Can Be Best Friends

Duct Tape Marketing

In effect, it’s like a ratchet that will constantly wind up more tightly and thereby twist SEO and PR closer together until one day they aren’t just friends but they are one and the same. Three Ways PR and SEO Can Be Best Friends written by Guest Post read more at Duct Tape Marketing.

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Think Global, Act Local

OnlyOnce

We ratcheted that up a lot in the last year, which is why we added the following statement in as one of our 14 Core Values : Think Global, Act Local. Think Global, Act Local. At Return Path , we have always had a commitment to community service and helping make the world around us a better place. We commit our time and energy to support our local communities. . We feel strongly that companies can and should make the world a better place in several different ways.

Horse Trading

ithacaVC

” Or possibly, “Ok, I would ask for the same thing if I were you, but let’s lose that full ratchet anti-dilution protection… ” Anyway, I am sure you get the point. “Horse trading” is a bad phrase in the startup/VC community. 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.

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Become a Great Leader – Harness the Power of Primal Emotions

Up and Running

When team members experience heartfelt emotion, their creative ability ratchets up a notch.

Focus on awareness and metrics are keys to success

Up and Running

With continuous development it can lead to percentage improvements at each step, which ratchet up and can have a profound impact on the final revenue tally. In this guest post, Alan Gleeson, General Manager of Palo Alto Software, Ltd., gives a U.K. perspective on entrepreneurship.

Startup Outlook from Silicon Valley Bank

Growthink Blog

Its very charter utterly excludes the notion of fostering development, opting instead for a one-way ratchet that can only lead to longer, more costly development cycles with no improvement in real safety for efficacy.” “Our On Friday Silicon Valley Bank released a survey of 375 executives at startup technology companies in the 4 core venture capital investment sectors – Software/Internet, Hardware, Life Science, and Cleantech. Here is what they found: Tech. Execs. Are Bullish.

Annual Takeaways from LeWeb2010

Babbling VC

If the quality of the conference remained high, you could easily ratchet up the prices and just make it a must-attend event, even if you have to pay more than for an open event. Little did I know a couple years back that this post would become an annual practice. Once again, I've attended LeWeb in Paris and as always, I'd like to share my thoughts on what I saw and experienced there. . First and foremost, the conference has become big. When I say big, I mean BIG.

How VCs Make Money….Hopefully

ithacaVC

That is a hefty sum (and over the life of a fund, can amount to a large amount of management fee; most funds have a life of 10 years and the management fee often ratchets down after 5 years). I thought it would be useful to demystify how VCs make money. Here is a short explanation. First, VCs get capital commitments from limited partners (i.e., investors). Let’s say VC1 has a $100mm fund. That means that it has capital commitments from investors of $100mm.

Raise Capital With The Skin You’re In: Blunt Truth from Don Charlton, CEO, The Resumator

David Teten

Yes, you like hip-hop, “urban” clothing and “ ratchet television”, but all that sinks you deeper into stereotypes. How do you raise capital for your company when you’re not in the traditional social circles of the money people?

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6 Reasons I’m bullish on mobile gaming #dragonarmy

Jeff Hilimire

I’m betting that as more mobile game studios generate substantial returns, the angel and VC community will ratchet up their interest in investing in these studios and entrepreneurs. Dragon Army is a mobile gaming studio. We’re going to create games for mobile devices for consumers (not for “clients”, which is my past experience). I’ve had several people ask me since we started, “Cool. Why exactly?”

What to do when you get screwed

The Startup Toolkit

Investors can delay until you’re desperate and then ratchet the terms. The most common (and emotional) screwing you’ll get in a startup is via your cofounders. A solution at the end.

Fear is the mind-killer

Startup Lessons Learned

As the product matured, they were able to ratchet up the quality to prevent regression on features that had been truly embraced by their customers. Starting instead from a position where feedback cycle time is the priority and allowing quality to ratchet up as the product matures provides a more natural lead in to continuous deployment. Lessons Learned by Eric Ries Thursday, May 7, 2009 Fear is the mind-killer Fear is an emotion that slows teams down. It makes us more cautious.

How To Craft Your Unique Selling Proposition (USP)

Entrepreneurs-Journey.com by Yaro Starak

In great detail, the ad explained what went on “beneath the dial&# with beautiful pictures showing dozens of interlocking ratchets, with wheels within wheels. In “The Social Network&# , the movie based on Facebook’s meteoric rise to prominence, my favorite line is when the young college students sit around a Harvard dorm talking about how fast their idea took off. FaceMash had just been coded, and the first few emails went out to friends.

Colleges Become Startup Factories | Crain’s New York Business

Campus Entrepreneurship

And Mr. Parthasarathi’s story is not an isolated one: In recent years, New York’s colleges and universities have ratcheted up their commitment to supporting budding entrepreneurs. Phil Auerswald ( The Coming Prosperity ) shared a great piece by Steve Garmhausen of Crain’s New York on the city/region’s universities and colleges.

On the Road to Recap:

abovethecrowd.com

Examples of dirty terms include guaranteed IPO returns, ratchets, PIK Dividends, series-based M&A vetoes, and superior preferences or liquidity rights. Why the Unicorn Financing Market Just Became Dangerous…For All Involved. In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.”

Version 2.0 and why Series Seed Documents are better than capped convertible notes

www.seriesseed.com

I completely understand not wanting to put in an onerous full ratchet but the fact that there is no weighted average ratchet seems a bit bizarre. SeriesSeed.com. Series Seed Financing Documents Blog. Documents. Blog Archives. Subscribe. « Step 2 (as opposed to version 1.1) | Main. 09/02/2010. Version 2.0 and why Series Seed Documents are better than capped convertible notes. First they ignore you. Then they laugh at you. Then they fight you. Then you win.” Mahatma Gandhi.

The VC Market – 2015 and 2016

Rob Go

The ratchet protection put in place by the last round of investors in Square is just the tip of the iceberg, and is relatively benign relative to other structures that I suspect are out there. In October, we held our annual Limited Partners meeting at NextView. In addition to reporting on the progress of our funds and the exciting stuff happening with the portfolio, we shared some thoughts on the broader market environment for VC’s and venture backed technology companies.

Is Europe going to emasculate venture with misguided regulation ?

Fred Destin

Imagine company X goes through a downround with full-ratchet anti-dilution which drives the price per share down by 75%.

Episode 2: Business Planning, Content Marketing, and 3D Printing – The Bcast

Up and Running

Other links: The Time to Think About the 3D-Printed Future is Now (HBR), Space Station Builds 3D-Printed Ratchet Wrench (NASA), Shapeways.com (3D printing marketplace). “There’s always money in the banana stand.” ” — George Oscar Bluth, Sr., Arrested Development.

Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

  A full ratchet anti-dilution clause is very unfriendly to entrepreneurs; it requires them to make up the entire difference in price from their own holdings.   A full ratchet anti-dilution clause is very unfriendly to entrepreneurs; it requires them to make up the entire difference in price from their own holdings. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe.