VC Cafe

JANUARY 30, 2023

SAFE note), shareholder agreements, company formation and governance documents (e.g. articles of incorporation, bylaws, shareholder agreements), employment contracts, patents and trademarks, contracts with providers, SEC filings, licenses Business documents – client contracts, pipeline (can be redacted: i.e

Technical Review 103

Technical Review Due Diligence Cap Table Startup 103

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Flexible VC: Revenue -based. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Steve Blank

APRIL 1, 2020

Your revenue plans are no longer valid. What’s your monthly cash burn at your new low revenue level? The CEO should dial through as many of the largest existing customers to get a firsthand understanding of the magnitude of any revenue shortfall. Some VC’s are walking away from signed term sheets.

South Korea 333

South Korea Salary Business Model China 333

Both Sides of the Table

FEBRUARY 25, 2010

We had many term sheets (it was 1999 and we had a pulse) and we were deciding which one to take. We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. We ended up agreeing a term sheet for $16.5 6 weeks’ later he didn’t have other term sheets.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Startup Professionals Musings

MARCH 5, 2023

Tailor investor proposals and term-sheets. They watch for formal follow-up to questions, demonstration of real product, and revenue results. Professional investors expect far more than an idea pitch – they are looking for a documented opportunity analysis and realistic financial projections.

Cofounder 389

Cofounder Startup Term Sheet Acquisition 389

Both Sides of the Table

AUGUST 8, 2009

Your friends and advisers tell you that this means you need revenue because in this economy VC’s will only fund businesses with revenue. So if it’s not necessarily revenue that’s preventing an investment, then WTF is traction? Unfortunately your advisers are wrong. Update them on your fund raising progress.

Technical Review 309

Technical Review Term Sheet Venture Capital Revenue 309

Agile VC

MAY 26, 2011

This also appears as a guest post at Fortune’s Term Sheet. LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point. How To Think About The Future. May 26, 2011. It was a $4.7M

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Both Sides of the Table

DECEMBER 17, 2009

Ability to Pivot – I don’t like to invest in people that I’ve never met before who come through my office wanting to have a term sheet within 30 days. Yes, there is the mythical company you all heard about that walked into Sequoia and had a term sheet 24 hours later. I’m sure that happens.

Entrepreneur 291

Entrepreneur Term Sheet Early Stage Affiliate 291

Steve Blank

FEBRUARY 26, 2020

There are two reasons to raise money: You have a killer idea that is only partially validated, that you think can get to $50M+ of revenue in 5 years with 80%+ gross margins (if margins are lower, you need a lot more revenue)and you need money to get to product-market fit, or. Revenue per customer? Revenue, Gross Margin?

Cofounder 429

Cofounder Seed Stage Valuation Metrics 429

YoungUpstarts

OCTOBER 12, 2017

Many of these companies are pre-revenue and in the cash burn stage as they try to establish their technology and market. Obtaining term sheets, note agreements, or even emails from lead investors stating their intentions to continue funding the entity may help support management’s assertion that they can raise more capital.

San Francisco 133

San Francisco Forecast Early Stage Term Sheet 133

Both Sides of the Table

OCTOBER 19, 2014

By September 26th we had submitted a term sheet which was signed on October 4th and financing was closed in less than 30 days. Again, I think the company would slug me if released revenue data, but … wow. So I hope that offers you insights into how companies move through the VC system. Domain Knowledge.

Technical Review 373

Technical Review North America Los Angeles Cofounder 373

Both Sides of the Table

SEPTEMBER 2, 2009

We should end the year with a few million in fully recurring revenue and we’re projected to double next year. But more spend = more viral opps = more revenue down the road. >50% of our revenue in now viral. Many term sheets ensued. I had that against the backdrop of several term sheets.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Startup Professionals Musings

MARCH 12, 2023

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. These considerations include the following: How much ownership and control are you willing to give up? How big is your startup opportunity?

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

View from Seed

APRIL 30, 2015

We also spell out the interest-only period, the amortization period, the warrants, the interest rate, and then some high level legal terms we would include in the documents and highlight in the term sheet — similar to a VC term sheet. In terms of negotiation, there are always hot buttons.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

ReadWriteStart

JUNE 1, 2020

The primary source of your funds should be your paying customers, i.e., your business should generate enough revenues and profits to fund the growth and expansion. It is essential to understand the funding structure stated in your term sheet and the advantages and disadvantages it may have for your business. Government programs.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Startup Professionals Musings

JUNE 13, 2020

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. These considerations include the following: How much ownership and control are you willing to give up? How big is your startup opportunity?

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

Startup Professionals Musings

JUNE 5, 2020

Tailor investor proposals and term-sheets. They watch for formal follow-up to questions, demonstration of real product, and revenue results. Professional investors expect far more than an idea pitch – they are looking for a documented opportunity analysis and realistic financial projections.

Entrepreneur 307

Entrepreneur Cofounder Term Sheet Acquisition 307

View from Seed

SEPTEMBER 4, 2018

In two cases, these businesses were doing significant early revenue ($500K/month+), so could be considered “post-seed”, although both of these companies had not raised significant institutional capital before we led their rounds. Of the last 15 investments we’ve made, 8 have been pre-product or pre-seed style rounds.

North America 120

North America Seed Stage Early Stage Lead Investor 120

VC Cafe

MAY 18, 2022

For many investors it’s not business as usual – and term sheets are getting pulled (normally a big no-no). I’ve seen more term sheets pulled in the last month than in the last decade. Round sizes will likely get smaller in the short term. Down rounds are coming. Source: Pitchbook NVCA Venture Monitor.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

Both Sides of the Table

MAY 13, 2018

If an investor isn’t engaging then they’re not suddenly going to get a term sheet. If we feel a mutual connection then my goal is to make your life easier by offering you a term sheet before you’re even raising and I’ll spend the time and effort trying to prove that it isn’t worth running a process.

Term Sheet 332

Term Sheet Due Diligence Campaign Sales 332

Austin Startup

NOVEMBER 12, 2017

Is third-year revenue of $10M good or bad? In that case, you are not making a specific offer; you are soliciting a terms sheet. Those investors will have terms sheets at the ready, and most of them will have some pesky MBA’s who will grind through all your assumptions, models, and market data.

Term Sheet 48

Term Sheet Technical Review Due Diligence Merger 48

The Next Web

SEPTEMBER 13, 2013

They want to see cash flow quickly (you cannot wait 2-3 years before determining your revenue model, like in Silicon Valley), so make sure you’re ready for this next step and have a solid plan in place on how to accomplish it. The term sheets tend to be fairly standardized and straightforward as well.

Asia 132

Asia Silicon Valley India Term Sheet 132

Berkonomics

DECEMBER 17, 2020

You will be given a “term sheet” during the process, calling out the terms proposed for the investment. These terms have become much more homogenized over the years, with many organizations adopting the same general form and terms offered to new investments.

Equity 62

Equity Finance Liquidity Event Angel Groups 62

This is going to be BIG.

MAY 5, 2023

She’s already a seasoned pro—three term sheets got signed in her room at the NICU where she spent the first 80 days of her life. In other words, there’s still lots of work left to do here and the lights will stay on until the last investment wraps up.

Later Stage 218

Later Stage Venture Capital Term Sheet Limited Partner 218

This is going to be BIG.

AUGUST 30, 2020

You’re told that you need more revenue, but someone who has half the revenue that you do got funded last week. Even a particular attribute like revenue has several factors to it, like growth, concentration and whether or not that revenue is a subscription for SaaS, one time purchases, or consulting. What gives?

Term Sheet 151

Term Sheet Startup Revenue Founder 151

This is going to be BIG.

SEPTEMBER 30, 2012

How else can you explain this headline matching a story about a professional social network still trying to explore revenues raising $17mm on an $80mm valuation? This is a company that, according to the article, got term sheets from half of the VCs that expressed interest in the company. Perhaps I need to rethink that.

Venture Capital 114

Venture Capital Marketing Term Sheet Software Review 114

reidhoffman.org

NOVEMBER 12, 2013

we had no revenue. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue. Instead, our strategy was to steer immediately into the revenue question because that was the top concern of investors in 2004. We made the mistake of listing three different revenue streams.

Entrepreneur 111

Entrepreneur Revenue Viral Networking 111

This is going to be BIG.

OCTOBER 12, 2020

One just got a seed term sheet for twice the valuation I put in at in the pre-seed and the other is doing $200k/month in revenue. Meanwhile, I’ve got another company out of the five I invested in out of this new fund also approaching $200k/month in revenue and I just want to go back to investing.

LP 136

LP Technical Review Software Review Valuation 136

ReadWriteStart

OCTOBER 6, 2011

Sramana Mitra is the founder of the One Million by One Million (1M/1M) initiative, an educational, business development and incubation program that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. The company has generated excellent investor interest and multiple term sheets.

Silicon Valley 118

Silicon Valley India San Francisco Entrepreneur 118

Hunter Walker

FEBRUARY 15, 2016

My business is about investing in extraordinary founder talent so it pains me that I can’t write a Homebrew Term Sheet to Laura Weidman Powers. Is there a revenue generating aspect to the organization that makes it self-sustainable? The Fellows Program is a great example of an earned revenue strategy that’s gone well.

Programming 48

Programming Term Sheet Revenue United States 48

Life Beyond Code

SEPTEMBER 27, 2011

One Million by One Million is a global initiative that aims to nurture a million entrepreneurs reach a million dollars each in annual revenue and beyond by 2020, thereby creating a trillion dollars in global GDP and ten million jobs. 1M/1M Program has a bold mission. This is where numerous ventures fail.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

VC Cafe

JUNE 25, 2020

Travel, beauty and fashion and manufacturing were most impacted.

Global 120

Global Los Angeles Silicon Valley 120

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. The Sharks Arrive With Dirty Term Sheets. The typical Silicon Valley term sheet does not include such terms. Dirty term sheets are a massive problem for two reasons.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

A Crowded Space

SEPTEMBER 18, 2015

Notice the distinct absence of little things like revenue, customers, engagement metrics, or gross margin. This can lead to lots of hype among investors and very rapid financings where VCs are forced to “act quickly” and provide term sheets in less than 48 hours. They can create temporary growth in vanity metrics like downloads.

San Diego 60

San Diego Software Review San Francisco Silicon Valley 60

Both Sides of the Table

SEPTEMBER 18, 2014

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.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

AUGUST 2, 2014

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. These considerations include the following: How much ownership and control are you willing to give up? How big is your startup opportunity?

Angel Investor 266

Angel Investor Entrepreneur Venture Capital IRR 266

Steve Blank

NOVEMBER 5, 2009

A Progress Graph on the right visually shows how far you’ve come (in whatever units of goodness you’re tracking – revenue, units, users, etc.) Good if you have your own money, better if the cash comes from investors, but best if it’s revenues from customers. Get back up and running.

Customer Development 262

Customer Development Developer Customer Silicon Valley 262