Startup Professionals Musings

JUNE 28, 2021

David is still one of the most active angel investors in New York, and also the CEO of Gust , which is an online platform for startup financing used by 800,000 entrepreneurs over the years, providing access to 85,000 angel investment professionals. Rose, according to his classic book, “ Angel Investing.” They will need more money.

Angel Investor 361

Angel Investor Accredited Investor IRR Angel Groups 361

Both Sides of the Table

MAY 9, 2018

I also had to negotiate a follow-on round at a portfolio company because new investors were trying to force a bit option-pool top-up that would dilute the founders and existing shareholders and existing investors were fighting over prorata rights. Some were interesting, some weren’t.

Software Review 381

Software Review Churn Rate Due Diligence New York 381

View from Seed

MAY 2, 2019

The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. The downside is that YC is itself quite dilutive, the program itself may not be a great fit, and there are many many companies out of your batch that won’t be one of the anointed winners. The Pre-YC Pre-Seed.

Early Stage 214

Early Stage Dilution Valuation .Net 214

Both Sides of the Table

SEPTEMBER 16, 2010

avoid being diluted). “When our capital and participation has helped de-risk a business to the point where it is appropriate to follow on and finance growth, we want to step up to do our pro rata and beyond.&#. In the worst case you want to protect your prorata investment as much as possible (e.g. But it is.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Dilution 283

Both Sides of the Table

MARCH 11, 2011

Too many entrepreneurs focus on dilution. But over-optimizing for dilution is a bad attribute relative to focusing on creating a big & winning company. It also is how they financed their entry into the United Nations. Bill thinks that most companies your success is usually binary. domain from the tiny island of Tuvalu.

Product 350

Product Tuvalu Dilution Incubator 350

Both Sides of the Table

MAY 28, 2018

Of course there are times where 15% dilution is more appropriate and other times it can be 33% but in a first meeting we’re just trying to establish general ranges for reasonableness. Most VCs lead one round of financing in your company and are looking for other VCs to lead subsequent rounds.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

MARCH 21, 2013

It also is a great way to finance your business without facing dilution before you actually raise venture capital and when the valuation you might get from angels is less than you’d want. So it wouldn’t bother me if 90% of your year-one revenue was PS provided it was done with a specific plan for year-2 software sales.

Software Review 321

Software Review Software IP Technical Review 321

View from Seed

OCTOBER 24, 2019

The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. No good investor would want the founder/CEO of a company to have insufficient ownership by the series A, and every founder I know is sensitive to taking too much dilution.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

MAY 9, 2014

David is also the CEO of Gust , which is an online platform for startup financing used by over 50,000 accredited angel investors, 1000 angel groups and venture capital funds, and 250,000 entrepreneurs. I just finished a new book, “ Angel Investing ,” by a friend and one of the most active angel investors in New York, David S.

Angel Investor 278

Angel Investor Angel Groups Accredited Investor IRR 278

Both Sides of the Table

OCTOBER 12, 2014

In the old days there weren’t many fights about whether angels would take their prorata rights in financing rounds. This might happen because to meet all investors needs they end up selling too much of the company, taking too much dilution and feeling beat up. Thus begins the dance. Aren’t they getting screwed?

Technical Review 336

Technical Review Later Stage Early Stage LP 336

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. As stated earlier, investors will dilute ownership upon nearly every round of financing. So, if o = initial ownership and y = total dilution, x = o * (1 – y).

Engineer 129

Engineer Dilution Option Pool Vesting 129

Feld Thoughts

SEPTEMBER 2, 2011

As Finance Fridays continues, we are introducing the concept of the Cap Table. If the full pool were to be given out, the dilution is fairly significant to the founders. They would own from 55% and 45% down to 36% and 29%, but until options are exercised they are not diluted.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Growth can dilute a business’s culture and customer value proposition and put the business in a different competitive space.

Dilution 209

Dilution Virginia Management Washington 209

Both Sides of the Table

DECEMBER 18, 2009

We got their commitment and our existing investors bridged us until the new financing round could close. And for all of this we had no dilution and paid no money. We committed to cost focus, customer adoption and delivering our numbers. We commited to getting by on much less capital than was planned. We signed deals worth $1.2

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

FEBRUARY 20, 2019

A-round venture capital firms will almost certainly make it a requirement that they get a board seat upon financing. If you are a super hot commodity then you may possible retain some board control through the B-round of financing with a 3–2 structure where the 2 is one seat for the A investor and one for the B investor.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

VC Cafe

FEBRUARY 27, 2024

While the answers are somewhat semantic, the pre-seed funding round is making a comeback in 2024 startup financing. To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples).

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Both Sides of the Table

FEBRUARY 8, 2016

Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive. The terrible consequence is that some great companies struggle to get financed. The best deals will continue to get financed. Don’t assume that you can “just do a down round” if necessary.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

The Next Web

NOVEMBER 20, 2013

So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. The calculation comes as follows: original 50/50 diluted down 20 percent to 40/40 for the financing, and then the one funding founder gets that 20 percent. To me, that is no different than financing the business.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Genuine VC

JULY 19, 2010

With that choice, they’re maximizing their full Series A options, potentially reducing ultimate founder dilution, and retaining flexibility for strategic options (including exit) along the path – all while raising money with a more efficient diligence and decision-making process.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Startup Professionals Musings

DECEMBER 16, 2017

David is one of the most active angel investors in New York, and also the CEO of Gust , which is an online platform for startup financing used by 500,000 entrepreneurs over the years, and funding over 1800 startups in just the last 12 months. Rose, according to his latest book, “ Angel Investing.” They will need more money.

Angel Investor 190

Angel Investor Accredited Investor IRR Angel Groups 190

Both Sides of the Table

NOVEMBER 14, 2017

This financial leader could well have come through the finance org at another startup or at a larger company but they often also can come from strategy consulting (Bain, BCG or McKinsey) or through investment banking (Goldman Sachs, Morgan Stanley, etc.).

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

JUNE 5, 2011

But the reality is that you’re faced with two problems: 1) the earlier the stage the riskier and thus more write-offs so you need to have enough ownership percentage in your winners to make up for the losers and 2) the earlier stage your check the more likely the company will need many more funding rounds behind you and thus you face dilution.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

www.seriesseed.com

MARCH 2, 2010

SeriesSeed.com Series Seed Financing Documents Blog Home Documents Blog Archives Subscribe 09/02/2010 Version 2.0   That’s because there are not that many issues to negotiate in a simple equity financing. price based anti-dilution). Then they laugh at you. Then they fight you. Then you win.”

Finance 58

Finance Term Sheet Equity Aggregator 58

Up and Running

JULY 2, 2014

of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 33.3% ownership and never dilute. When fundraising for a startup, all investors dilute as additional investors join in on the deal. We were targeting to raise around $3 million in investment capital.

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Not to mention the fact that every time you compensate with equity, you dilute your own ownership of the business.

Equity 116

Equity Stock Options Vesting Stock 116

Both Sides of the Table

AUGUST 14, 2017

ICOs certainly have a place in startup financing. Boards are not appointed to be founder-friendly lapdogs for the 1–3 founders who start companies and usually own the largest equity positions in the company.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

ReadWriteStart

SEPTEMBER 10, 2010

I call it drip-financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn't always come along, though). In 1M/1M, our preferred financing strategy is customers. You can get cash without diluting your ownership in the company.

Cloud 115

Cloud Silicon Valley Incubator Bootstrapping 115

Both Sides of the Table

SEPTEMBER 29, 2009

The other investors around the table didn’t agree nor did the “independent” board members who were willing to turn a blind eye to capital inefficiency since they didn’t have any economic interests that would be diluted by continued fund raising to support a capitally inefficient management team.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

YoungUpstarts

SEPTEMBER 23, 2017

If you are having any issues with cash flow, you always have the option of opting for alternate business finance. Nonetheless, many entrepreneurs don’t do this because accepting ownership dilution when it isn’t necessary, is too painful. Both the choices tend to take away a few options. Plan, Plan and Plan.

Cofounder 124

Cofounder Sweat Equity Equity Dilution 124

View from Seed

DECEMBER 4, 2019

Over the last 10 years, we’ve been in a bull market with considerable froth in late stage financing activity and valuations. These growth rounds may be more dilutive than planned, but will still occur without punitive terms and allow founders, teams, and early investors to emerge with very successful outcomes at the very end.

LP 256

LP IRR Distribution Portfolio 256

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. What are the financing plans for the company? You'll need to decide what kinds of decisions the board makes, and which ones it won't. What happens if one of us leaves the company? Raise angel funding?

Cofounder 128

Cofounder Founder Equity Dilution 128

YoungUpstarts

JUNE 13, 2011

They end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service. The problem is that too many entrepreneurs never learn to say ‘NO!’ In an effort to get their business off the ground and keep it up and running, they say ‘yes’ to everything. magazine.

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

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. I’ve never heard of a team that did this, and then regretted the decision to take a little more money (and dilution) in a round to get the best people around a table.

Dilution 104

Dilution Equity Hiring Partner 104

Berkonomics

OCTOBER 10, 2024

Third (if you’re keeping score), it is not wise to dilute the founder’s ownership greatly in the first round of financing. Giving control over that vision to others early on often dilutes the vision and is a disincentive to the entrepreneur. Entrepreneurs have a vision for what and how to create and build a great business.

Dilution 127

Dilution Startup Retention Valuation 127

Business Plan Blog

OCTOBER 4, 2013

Rather, give titles such as VP of Engineering, Product/Technology, Sales, Marketing, Finance, etc. Having too many co-founders will only lead to your eventual dilution. Hire a VP of Finance that can increase profitability by monitoring operations, legal fees, HR expenses, office space and the like.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

David Teten

DECEMBER 2, 2019

I’m now researching non-dilutive funding for Action Tank , a startup I’m gestating to “Make America Functional Again”. I worked with outsourced research firm Wonder * to identify all of the institutions we could who support tech impact startups with cash and community, and in many cases without dilution.

Technical Review 60

Technical Review SBIR Dilution Silicon Valley 60