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Cram Down – A Test of Character for VCs and Founders

Steve Blank

Cram downs are back – and I’m keeping a list. At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. Except, that is, for the bottom feeders of the Venture Capital business – investors who “ cram down ” their companies.

Cram Down 417
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The Damaging Psychology of Down Rounds

Both Sides of the Table

Often that is a good incentive because it keeps VCs from screwing people over since a bad reputation or bad working relationships could cost you deals in the future. Startup Advice' But in this case it works against the founders. Love to debate in the comments. Image courtesy of Daniel Moyle on Flickr.

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Startup Fairy Tales and Other Tall Tales That Venture Capitalists Tell

Growthink Blog

The angel then introduces the entrepreneur to his or her wealthy friends and business connections who, based on the good reputation of the referring angel, also invest. Venture capitalists for the most part are very nice guys and passionate about entrepreneurship, but they are not shrinking violets.