View from Seed

FEBRUARY 12, 2020

I notice some founders (from YC in particular) have been trained to say something like: “we are just starting the process, but things are moving faster than we expect and we are already scheduling follow-up conversations and partner meetings.”. Some founders lay out a specific time frame for when they hope to get the round closed.

Term Sheet 364

Term Sheet Burn Rate Founder Partner 364

David Teten

SEPTEMBER 5, 2014

Like many established finance & media companies, GLG knows that the tech startup sector is a growing part of the economy. I’ve also presented at a range of industry conferences on how institutional investors can use professional networks for research , origination , market research , and value creation.

New York 114

New York Technical Review Networking Advisory Board 114

Gust

OCTOBER 26, 2011

As we conclude our convertible note financing series, there are assorted terms commonly seen in term sheets and deal documents that are worth touching on briefly. The Note Purchase Agreement and Convertible Promissory Note are essential documents for any convertible note financing. See discussion of amendments below.)

Finance 79

Finance Term Sheet Covenant Accredited Investor 79

Hunter Walker

SEPTEMBER 12, 2022

And while I passed on leading their seed, I did contribute a smaller amount into the financing, along with three subsequent pro rata/super pro rata investments. I agreed and we subsequently did a TechCrunch Live discussion together with a follow-up blog post in her newsletter.

Cofounder 99

Cofounder Lead Investor Founder Restful 99

Pascal's View

JULY 9, 2017

At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. When it comes time to convert the notes, these entrepreneurs face ‘sticker shock’ about their post-financing ownership.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

View from Seed

OCTOBER 21, 2014

Sharing these pricing expectations early with potential lead investors fundamentally qualifies your conversations, but it also runs the risk of prematurely losing a potential financing partner, or else it can reduce options to maximize your fundraise outcome. Building a startup and currently in the seed stage?

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

View from Seed

JANUARY 11, 2021

Said one investor, “We may have overdone it on socialization at the expense of productivity.”. Of the eight venture capitalists we interviewed, six commented that they felt more efficient and were able to have more early conversations during this period than before.

Venture Capital 350

Venture Capital Cofounder Early Stage Seed Stage 350

Genuine VC

JULY 30, 2012

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndication 136

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. The right lead investor and the right amount of cushion in a raise can help with the best defense against scaling disaster—hiring.

Dilution 104

Dilution Equity Hiring Partner 104

Version One Ventures

JANUARY 28, 2013

Since CBInsights released its report in December, conversations have accelerated about the pending “Series A Crunch.” Seed financing grew from 89 fundings in Q1 2009 to more than 500 in Q3 2012. That means there are a lot more seeded startups out there: an excess demand for a limited supply of Series A financings.

Burn Rate 140

Burn Rate San Francisco Vesting Finance 140

Scott Edward Walker

JUNE 9, 2019

Over the past few weeks, two of my clients have received financing term sheets in which the investors requested super pro rata rights. Simply put, pro rata rights permit the investor to maintain its percentage ownership in subsequent financing rounds. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. So you can see why this leads to a lot of tension and misunderstanding. It’s very simple.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Hunter Walker

JANUARY 10, 2022

I really enjoy our conversations and am especially glad you’re up for some candor, because it’ll help provide some insight into the state of the startup and funding market. Homebrew was on the board of a construction tech startup called BuildingConnected , having led their seed financing. The needs of the lead investor for ownership?

Cofounder 93

Cofounder Founder Acquisition Startup 93

SoCal CTO

SEPTEMBER 8, 2010

thought it would be helpful to put some of my thoughts into a blog post and hopefully spur some conversation in the comments and over email. While I agree that many VCs are crummy seed investors, I think there are some that are excellent seed investors. More tiers = more complication = more confusion. twenty in your wallet?

Startup 191

Startup CTO Hire Cofounder Venture Capital 191

mashable.com

NOVEMBER 2, 2011

Look for Your Lead Investor. First you’ll want to find a lead investor — someone many other investors will recognize and respect. This list of top angel investors is a good start. When you make contact, send them a link to your AngelList profile early on in the conversation. Holiday Lists.

Social Media 80

Social Media Startup Angel Investor RSS 80

VC Adventure

MAY 21, 2014

A few months ago AngelList announced Syndicates - enabling investors on AngelList to create fund-like groups of investors to invest together in AngelList companies (following a single lead investor). 506(b) vs 506(c): These refer to two of the SEC rules that regulate “crowdfunding” financing.

Syndication 93

Syndication Syndicate Technical Review Due Diligence 93

Hippoland

JANUARY 4, 2017

Usually, an equity round is kicked off by a “lead investor”. Typically, this lead investor decides the terms of the round and also invests the majority of the money that will go into your company. That lead investor will also usually help you fill out the remainder of your round with other investors.

Convertible Security 48

Convertible Security Equity Security Silicon Valley 48

Both Sides of the Table

MARCH 6, 2011

Might as well cut off our conversation and just restart it 48 hours later on camera for This Week in VC. I accidently blow the cover of a hot startup raising a round of financing on AngelList (oops!) – hint – it’s a product that I talk very openly about loving but I’m not an investor. So I thought, WTF?

Valuation 292

Valuation Deal Flow Lead Investor Cofounder 292

Agile VC

JANUARY 12, 2012

When a startup doesn’t match the stage where a particular investor focuses, founders may get a response along the lines of “This is interesting to us, but come back once you get from X phase to Y phase” That could be from seed stage to a larger Series A financing need, or to progress from pre-product to post-revenue.

Seed Stage 100

Seed Stage Silicon Valley Syndication Syndicate 100

VC Adventure

MAY 21, 2014

A few months ago AngelList announced Syndicates – enabling investors on AngelList to create fund-like groups of investors to invest together in AngelList companies (following a single lead investor). 506(b) vs 506(c): These refer to two of the SEC rules that regulate “crowdfunding” financing.

Syndication 48

Syndication Syndicate Technical Review Due Diligence 48

Both Sides of the Table

MAY 13, 2018

If you’re raising a round where a new lead investor would invest $5 million the VC fund must have no less than $100 million and if you’re looking for them to write $15–20 million as the lead their fund realistically should be at least $400 million. How Many Investors Should You Talk to in a VC Fund Raise?

Term Sheet 332

Term Sheet Due Diligence Campaign Sales 332

ithacaVC

NOVEMBER 14, 2014

Here is Walla’s post: I can’t tell you how many times I’ve had this conversation. The valuation only exists if investors validate it. Traditionally, there’s a lead investor that validates a valuation, but a lot of companies now raise without a lead. Map out multiple stages of financing.

Valuation 69

Valuation Startup Down Round Early Stage 69

Reid Hoffman

JANUARY 26, 2021

The primary goal of this conversation was to explain how and why a great startup board can be a powerful tool to help the CEO make the company successful. One of the things a financing round brings is an opportunity to strengthen the startup’s overall network. Financing can be one of these things. That’s a no-brainer, right?

Startup 36

Startup Equity Early Stage Green 36

Bryce Dot VC

FEBRUARY 12, 2015

The equity element will only become a factor if the participating company chooses to raise a round of financing or sell out to an acquiring company. terms that were most important to us and to founders: cash distributions and contingent equity conversion. It also facilitates the two elements of the indie.vc Within the indie.vc

San Francisco 40

San Francisco Distribution Equity Delaware 40

Austin Startup

MAY 17, 2017

At a minimum, the lead investor(s) of the round get Board seats; although they shouldn’t get Board control. They’ll often ask for different variants of ‘information rights’ — which can include delivery of regular financials, and notification of major transactions (like financings). Originally published at Silicon Hills Lawyer.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

Rob Go

AUGUST 9, 2016

Think of it this way, an investor may invest in 1-3 deals a year, and build a portfolio of 7-12 active companies that they are point on at any given time. Entrepreneurs are typically only choosing one lead investor and board member per round. How did this investor react and how did they help? But often, it is not.

Term Sheet 28

Term Sheet Due Diligence Lead Investor Portfolio 28

www.seriesseed.com

DECEMBER 9, 2012

Series Seed Financing Documents Blog.   That’s because there are not that many issues to negotiate in a simple equity financing. You can follow this conversation by subscribing to the comment feed for this post. Have you had anyone from Canada use these documents for financing a Canadian (Quebec) entity? 09/02/2010.

Term Sheet 40

Term Sheet Ratchet Dilution Equity 40

Austin Startup

APRIL 1, 2017

out of state VCs Don’t rush a term sheet In assessing financing terms and interacting with their lead investors, most founders instinctively focus on two core things: economics and control. Do not take that selection lightly. Background Reading: How to avoid “captive” company counsel Local v.

Term Sheet 48

Term Sheet Institutional Investors Lead Investor Technical Review 48