Both Sides of the Table

FEBRUARY 8, 2016

The smartest companies in the market that I know are working aggressively to lower burn rates through pragmatic cost cutting knowing that the next fund-raising cycle may be unpleasant. I’ve heard enough companies say “we simply can’t cut costs or it will hurt the long-term potential of the business” to get a wry smile.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

ReadWriteStart

JUNE 1, 2020

It is going to cost a lot of money just to get the initial batch of products to test the market and would definitely require external funding. I have interacted with a lot of founders who funded their initial business expenses through credit cards. You might have seen that valuations of several unicorns were suddenly slashed down.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Lightspeed Venture Partners

OCTOBER 7, 2012

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. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

www.quora.com

SEPTEMBER 22, 2011

Type to Add and Search Questions; Search Topics and People Startups Startup Compensation Entrepreneurship Compensation Stock Options Major Internet Companies Silicon Valley Why is there such a large founder to early employee equity drop-off? The real question here is: why is it fair for founders to get so much more?

Equity 40

Equity Employee Founder Cofounder 40

Feld Thoughts

FEBRUARY 9, 2016

One of my favorite lines in buried in the middle: “I’ve heard enough companies say “we simply can’t cut costs or it will hurt the long-term potential of the business” to get a wry smile. Pragmatic cost cuts are always possible and often productive.” I have two simple rules for founders in my head from this experience.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

SEPTEMBER 27, 2010

And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge. Chris Sacca talked about how a $20 million exit can change a founder’s life and that shouldn’t be scoffed at. That’s awesome. I had two kids and a rental house.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). Yes for Series Seed holders and founders. Y Combinator Series AA Equity Financing Documents (by WSGR). Series Seed Financing Documents (by Fenwick & West). Drag-along.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

FEBRUARY 14, 2016

Why Inside Rounds are Difficult? Many founders don’t understand why inside rounds are so difficult. So inside rounds get delayed and when there are non-participants you often find “recaps” or “structure” or “pay-to-play” provisions. Why Down Rounds are Harder Than You May Think.

Valuation 150

Valuation Down Round Startup Later Stage 150

VC Cafe

JANUARY 29, 2024

Many startups extended runway, cut costs and took on painful down rounds or expensive debt to avoid raising in 2023. It’s not just a cost consideration, but a desire for independence and neutrality. Those ‘band aids’ are running their course and it might get worse (i.e.

Global 171

Global Generative AI Venture Capital Valuation 171

VC Cafe

NOVEMBER 30, 2022

The 2022 Founders Factories report by DealRoom and Accel shines a spotlight on the startup clusters that produced most unicorns across Europe and Israel, and then tracks the alumni of those unicorns to test where the talent goes to found their next companies. London and Tel Aviv are home to the most founder nurturing unicorn startups.

Israel 97

Israel Europe Balance Sheet Valuation 97

NZ Entrepreneur

SEPTEMBER 16, 2020

The statistics show that even though most founders bet their time and resources that their startups will be the best in the world, 90% of those new startups won’t be in operation in 10-15 years. For example, “How will unit cost affect our capital requirements and how will product pricing affect revenue?”

Startup 94

Startup Sales Cycle Down Round Revenue 94

Growthink Blog

MAY 23, 2011

Technical progress and market traction are much slower and cost a lot more than anticipated. Usually unbeknownst to all, the decision around pursuing or accepting a venture capital round will be the most important factor in determining the investment return for the founder and the original angel investors in the company.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Both Sides of the Table

JUNE 5, 2016

In other words, it isn’t that VCs suddenly got smart, it’s that the costs of starting a company went down dramatically. Angels / seed often wanted to exit early and late-stage wanted more ownership than founders would sell so secondary transactions were common. 3VCs agreed to fund an inside round and cut costs.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Both Sides of the Table

MARCH 30, 2016

Investors sat with the founder & CEO, Jason Spievak, and asked him what he wanted to do about the future. Like the market, Invoca has learned the importance of pragmatic growth over “growth at all costs” because when markets shift companies that run lean always have more options than those that only have a growth agenda.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Berkonomics

APRIL 6, 2012

This is only a minor problem in that both forms can convert easily into ‘C’ corporations at low cost and little consequence. Second, it is important in the first investment round to face the issues that may be required later by subsequent, more sophisticated, investors such as VC’s.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Berkonomics

MARCH 28, 2019

This is only a minor problem in that both forms can convert easily into ‘C’ corporations at low cost and little consequence. These include “tag along rights” which allow investors to sell some shares when others, such as management or founders, sell any shares. And what VC’s worry about.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. The reverse also holds: a Value investment can become Momentum, and then follow with a down round.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Scalable Startup

OCTOBER 26, 2011

The second round is often for some or all of the following – corporate growth, go to market, turn the prototype into a robust offering, marketing costs, or to hire a sales force. It’s no longer based on a hunch, unless the company is in trouble and needs money to finish what the first round started. Founders Fund.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

Altgate

MARCH 8, 2009

Later stage funds will end up owning more of their portfolio companies via down rounds and ultimately should see ok returns. The early stage investors are going to take a huge hit since many of their portfolio companies will be capital starved and will be forced out of business or into fire sales. But some will be saved.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

Berkonomics

OCTOBER 5, 2023

What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn. Ignoring the cost of product for a moment to make a point, saving a month’s fixed overhead by making processes more efficient, could easily double profits for the year.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

www.paulgraham.com

APRIL 28, 2010

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. Few startups get it quite right.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Both Sides of the Table

SEPTEMBER 18, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. Raising lower seems kind of like something is wrong.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Berkonomics

AUGUST 10, 2017

What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn. Ignoring cost of product for a moment to make a point, saving a month’s fixed overhead by making processes more efficient, could easily double profits for the year.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Berkonomics

MARCH 30, 2010

What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. Their own ego is also a factor – will a down round signal weakness? Anxiety slowly crept into everyone’s world.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

crowdSPRING Blog

MAY 10, 2013

Startup Founders: Don’t Forget to Sell the Dream | by Jason Shen – [link]. The Damaging Psychology of Down Rounds | by Mark Suster – [link]. Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences – [link]. “Embrace skeptics. ” [link]. .”

Social Media 93

Social Media Small Business Design Media 93

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. We’ve kind of designed the kind of growth that we want.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Gust

SEPTEMBER 17, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. There are a million ways to do quick, easy, low-cost rounds with prices.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. We’ve kind of designed the kind of growth that we want.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

Both Sides of the Table

FEBRUARY 4, 2016

61% of VCs said valuations were “marginally down” in Q4 of 2015 but 91% expect price decreases in the next two quarters. In fact, 62% of VCs surveyed – across a wide variety of stages and geographies – said their portfolios were starting to cut costs, expected the markets to tighten. Most flat rounds.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Scalable Startup

FEBRUARY 1, 2013

I can switch to SaaS for less than the cost of the maintenance on the old software.” Alexia Tsotsis: Are you seeing down rounds because the NASDAQ is down? Marc Andreessen: No, we have not seen down rounds yet. I have got to make this stuff work on iPhones anyway, so I have got to do something new.”. “My

Software Review 22

Software Review Startup Venture Capital Stock 22

Berkonomics

NOVEMBER 27, 2024

This is only a minor problem in that both forms can convert easily into ‘C’ corporations at low cost and little consequence. Second, it is important in the first investment round to face the issues that may be required later by subsequent, more sophisticated, investors such as VC’s.

Limited Liability Company 62

Limited Liability Company Post-Money Valuation Valuation Down Round 62

Both Sides of the Table

OCTOBER 18, 2015

Cendana founder Michael Kim was amongst the earliest and certainly the most focused LP to spot the changes in venture capital leading to seed stage funds and has backed many of the best in the industry so it’s always a pleasure to come and share thoughts with all of these great peers. 25% “down rounds?

IPO 150

IPO Venture Capital LP SEC 150