What Do I Do If My Business Runs Out Of Cash?


If the situation is dire, you may also consider recapitalizing the business through a debt refinancing or by selling equity. by LJ Suzuki of CFOshare. First, take a deep breath. Exhale. Do it again.


Both Sides of the Table

You find out those that have the fortitude to work out a new way forward, who can handle recapitalizations or downsizing or shutting down business lines or hiring whole new teams. Failure. It smells. People are afraid of it. It’s like cancer. When you have it you find you who your true friends are because they’re the ones who double down on helping, on being available, on listening, on understanding. Most people run from failure or disease because they’re hard to handle.


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The Silliness Of Recapping Seed Rounds

Feld Thoughts

So they recapitalize the company. Here’s the scenario. A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. The company spends the $1m building and launching their first product.

What Just Happened With OnLive?

Feld Thoughts

Rather than shut down, they found a buyer / investor (which could be a subset of the existing investors) who would recapitalize the company and keep it going as long as he didn’t inherit the liabilities. Disclaimer: I’m not an investor in OnLive and I know nothing about the specifics of what happened. I’m just speculating, but it’s informed speculation based on my experience.

Flexible VC, a New Model for Companies Targeting Profitability

David Teten

When the company hits potholes, Flexible VC investors usually don’t have the nuclear options of firing management and/or doing a recapitalization. (co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund.

Startup Financial Models: Best Practices in Spreadsheet Design

David Teten

A good model should have the ability to test assumptions in order to analyze the impact on future financial performance, including growth rates, operating margins, product lines/individual segments, and refinancings/recapitalizations. (This is the first of three blog posts on financial modeling for startups.).

Stock Market Drops. Then It Rallies. What Happens Next for Funding?

Both Sides of the Table

On the positive side, corporate profits are up, their balance sheets have been repaired and they have recapitalized themselves to have lower amounts of debt relative to equity. This article was originally published on TechCrunch. Venture Capitalists typically have partners’ meetings on Mondays. Why is that? Who knows. But probably because as a group we travel a lot.

Stock 257

Silicon Valley Frontlines: Two Tales of "Working For Equity"


a year burn rate and your equity is worthless due to numerous recapitalizations and bridge loans from investors then either you don't get it or I'm stupid to do it. Silicon Valley Frontlines. In-the-Trenches Consulting to Startup and Emerging-Growth Companies. Archives. Subscribe. « Presentation Secrets of Steve Jobs! Main. | Why Do Otherwise Sensible Companies Not Have CFOs? » January 23, 2010. Two Tales of "Working For Equity".

How to Be an Angel Investor


The reason you dont want to give them up is the following scenario.The VCs recapitalize the company, meaning they give it additionalfunding at a pre-money valuation of zero. It doesnt happen often.Brand-name VCs wouldnt recapitalize a company just to steal a fewpercent from an angel. March 2009 (This essay is derived from a talk at AngelConf.) When we sold our startup in 1998 I thought one day Id do some angelinvesting. Seven years later I still hadnt started.

On the Road to Recap:


This severely heightens the risk of either running out of money or a complete recapitalization that wipes out previous shareholders (founder, employees, and investors alike). 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.”

Startup Founder Agreements


The only way to remove their equity holding in the cap table is by buying them out or through a recapitalization of the company. I have been thinking a lot recently about how to apply agile development principles to investing and key aspects of startup development such as team building. That’s also the thread connecting my two recent posts on VentureHacks. Both stem from the agile principle of delaying decisions until the last responsible moment.

The Entrepreneur Thesis

Both Sides of the Table

I really believe that some firms have the strategy of edging out the entrepreneurs, bringing in a new management team, recapitalizing the company, minimizing the founders’ share and taking maximum ownership for the VCs. I was going to save this post for a while but the Patzer Problem meme has forced my hand. I have a philosophy. A thesis. I call it the entrepreneur thesis.

Everything you ever wanted to know about advisors: Part 2.


The company is acquired, recapitalized, or otherwise restructured and the advisors are no longer useful or desired. Venture Hacks Good advice for startups. Disclaimer: This is not legal advice. Products Archives @venturehacks Books AngelList About RSS Everything you ever wanted to know about advisors, Part 2 by Nivi on February 27th, 2008 Here are more frequently asked questions about advisors. See Part 1 for the rest. If you have more questions, email us at ask@venturehacks.com.