Startup Professionals Musings

OCTOBER 10, 2014

New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge. A second harsh reality for entrepreneurs is the realization of how little power you have to protect the position of these early investors.

Founder 254

Founder Cram Down Angel Investor Equity 254

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.)

Lean 263

Lean Silicon Valley Startup RSS 263

Startup Professionals Musings

APRIL 17, 2013

New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge. A second harsh reality for entrepreneurs is the realization of how little power you have to protect the position of these early investors.

Cram Down 230

Cram Down Angel Investor Equity Dividend 230

Haystack

JANUARY 12, 2020

If the 2010’s were about the institutionalization of seed funds, I believe the next decade ahead will be a test of who can stake out their territory as these forces rise from the bottom and cram down from the top.

Seed Stage 106

Seed Stage Cram Down Early Stage Cofounder 106

Startup Professionals Musings

NOVEMBER 11, 2015

New money from professional investors sees lesser value in old money, so the equity of early investors is “crammed down” and often lost in the scale-up surge. A second harsh reality for entrepreneurs is the realization of how little power you have to protect the position of these early investors.

Cram Down 120

Cram Down Angel Investor Equity Dividend 120

Rob Go

SEPTEMBER 2, 2014

Getting Crammed Down. If a), you reduce the cram-down risk, but also reduce the fund’s upside because you own less of your portfolio companies to begin with. These platforms are really interesting to seed funds because they are simultaneously a threat, a weapon, and a sourcing mechanism.

Cram Down 66

Cram Down Institutional Investors Dilution Seed Stage 66

A Crowded Space

MAY 31, 2016

In addition, in the more dire cases, these investors may see their holdings crammed down by a reverse split where the preferred converts to common on a x:1 basis, so x shares of preferred go to 1 share of common. A 5% equity stake could get cut down to 1%.

Cram Down 60

Cram Down Pay to Play Angel Investor Warrant 60

Growthink Blog

MAY 23, 2011

This combo all too often leads to various forms of deal unpleasantness, like cram-down rounds, liquidation preferences, and change of control provisions, which in turn, often lead to unhappy founders and angel investors even in somewhat successful exits. And they hire very aggressive securities attorneys to represent their interests.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Rob Go

MAY 21, 2014

Angels don’t want to look stupid by having the large number of losses required to catch winners, or get crammed down by VCs investing big dollars ahead of them. VC’s don’t want to look stupid by investing in things too early, or trying to use capital as a weapon only to go down in flames.

Boston 57

Boston Cram Down Indiana Silicon Valley 57

The Next Web

SEPTEMBER 29, 2013

Once the money is spent, young entrepreneurs are usually faced with this situation: The Cram Round - Founders raise money at a lower valuation than the first round and now understand what anti dilution clauses really mean. Tough situation.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Tim Keane

AUGUST 20, 2009

"  The problem has been that too-high valuations and too generous terms have spawned painful down rounds that squash the entrepreneur and his early investors.    New money, usually VC money, comes in and crams down those early investors and takes substantial shares from the entrepreneur. 

Milwaukee 60

Milwaukee Bootstrapping Cram Down Deal Structure 60