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by Alejandro Cremades , cofounder of Panthera Advisors and author of “ The Art of Startup Fundraising: Pitching Investors, Negotiating the Deal, and Everything Else Entrepreneurs Need to Know “ Why should entrepreneurs intentionally be generous when negotiating with investors? Generosity is nowhere on their radar.
Kayak was started here in my backyard of Boston… co-founder & CTO Paul English and the product/engineering team is based here in Concord MA. Co-founder & CEO Steve Hafner and the business team are based in Norwalk, CT. Post-moneyvaluation probably no higher than $12M (2). Read More ».
The founders were very sympathetic; a man, laid off from his job, and his very pregnant wife, who sold their house and investing $150k into the business and are working hard to make a go of it. At this point, the very pregnant cofounder was weeping. In this way, they remind me of the Lifter Hamper entrepreneur.
On October 27, 2010 I wrote a blog post about the “ 57 Things I Learned Founding 3 Tech Companies.”. It has been awesome, flattering, and humbling to see that post went viral and has been seen by so many thousands of people — mainly aspiring entrepreneurs — and has been translated into many languages.
Andrew Krowne and I recently co-wrote an article in Tech Crunch , Why SAFE Notes Are Not Safe for Entrepreneurs. This is a fundamental issue that does, indeed, boil down to understanding the post-moneyvaluation of a company. Many entrepreneurs lose track of what they have been cooking up in the cap table.
One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.
What is the post-moneyvaluation of your last round? Post-moneyvaluation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count). But you should beware of boards that are only the founders and their family and friends.
In the old days VCs funded off of a “pre-money” valuation. If you add the pre-moneyvaluation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-moneyvaluation. Those are the big three. For me it’s clear.
He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. Entrepreneurs often believe their startup company faces legal threats from only external sources. You can start by examining every aspect of the co-founder relationship.
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 postmoneyvaluation. Sure – it happens.
At a (pre-blizzard) conference I attended today run by Gridley & Co, this theme was reinforced, with rosy predictions of an M&A boom. In each case, a strong unsolicited offer came in that would have yielded "VC-like" returns and many millions for the founders and senior executives. Do you still love running the business?
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