Gust

OCTOBER 17, 2011

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

Gust

SEPTEMBER 17, 2014

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. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Both Sides of the Table

JUNE 5, 2016

So in companies with high burn rates you can find the following: Seed funds wanting to sell the company / get a return or growth investors pushing for a recap or massive down round. I’ve seen this a bunch in the past 12 months. Lack of Conviction / Follow Through. Choose wisely. Read the responses to this story on Medium.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Hunter Walker

AUGUST 8, 2023

Satya and I were having lunch (yummy Chinese food) with our LPAC and the conversation turned to generally “how much more did venture portfolios have to fall before they found their true current value?” Restructures, Down Rounds, and Pay to Plays. Whatever gets reported is just the tip of the iceberg.

Portfolio 105

Portfolio Cap Table LP Valuation 105

www.quora.com

SEPTEMBER 22, 2011

Even if your company succeeds, there is absolutely no guarantee your equity will not be wiped out in a down round. Even better, executives will negotiate the acquisition price of their company down; in exchange for a larger amount of post-acquisition retentio n equity and accelerated vesting.

Equity 40

Equity Employee Founder Cofounder 40

ithacaVC

NOVEMBER 14, 2014

Here is Walla’s post: I can’t tell you how many times I’ve had this conversation. A founder is about to raise their first round and asking me how to value their company. [1]. Hopefully, it’s in high demand for good reasons, otherwise you risk a down round in the future. Don’t risk a down round.

Valuation 69

Valuation Startup Down Round Early Stage 69

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees.

Marketing 70

Marketing Down Round Startup IRR 70

Bryce Dot VC

APRIL 21, 2016

“Why the Unicorn financing market just became dangerous…for all involved.” But his post was detailed and thorough and took the conversation to a level few have pressed. But his post was detailed and thorough and took the conversation to a level few have pressed. That about covers it, right?

Silicon Valley 40

Silicon Valley Dilution Term Sheet Down Round 40

Rob Go

JUNE 1, 2016

We’ve been in a period of unnatural financings, both in terms of valuation and the amount of capital that has gone into companies relatively early in their life. Where I think funds do start having hard conversations around follow-ons is when they need to lead inside rounds or protect themselves in down rounds.

Term Sheet 28

Term Sheet Portfolio Valuation Warrant 28