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). N: exit size.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Both Sides of the Table

OCTOBER 12, 2014

And because they are so much larger by the time they go public (think: Facebook $104 billion, Twitter $18 billion, Alibaba > $200 billion) the private value of the most successful companies pre-IPO is more more valuable than it ever was. Why prorata rights are now sought out by LPs. Aren’t they getting screwed? That seems fair.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Agile VC

JULY 11, 2012

Burr, Egan, Deleage [Boston] –> Huge wins in the 1980s and early 90s included Continental Cablevision (sold for $5.3B – now a big chunk of what is Comcast), Qwest Communications, Cephalon (biotech IPO, acq by Teva), and Powersoft (Burr, Egan made 35x when it went public and then was acquired by Sybase).

Silicon Valley 240

Silicon Valley Carried Interest Cofounder Boston 240

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Should VC’s really be impacted by public market valuations when the money that they’re investing today should be for returns in 7-10 years? Short answer – yes.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

The Startup Magazine

MARCH 14, 2022

The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. At this stage, the founder mainly raises funding from their sources or family and friends. If you are one of the fortunate early-stage investors to be presented with such an opportunity, it could lead to rewarding returns.

Technical Review 167

Technical Review Due Diligence India Startup 167

View from Seed

DECEMBER 4, 2019

At the same time, despite some realizations in recent years through M&A, PE acquisitions, and IPOs, the general sense I get from LPs is that the level of distributions don’t quite line up with the unrealized performance. This would suggest that TVPI would be performing well. The post How is the VC Asset Class Doing?

LP 256

LP IRR Distribution Portfolio 256

ReadWriteStart

JULY 18, 2011

Kedrosky: "In the 90's I was an analyst through all this [tech investment and IPO] madness. You want to build your own IPO and exit. At this stage, the founders pay for the dilution of the shares and the funders will take 20 to 25% of the company. An investment banker sees it as a serial kill, conquest, get the fee and move on.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Startup Professionals Musings

SEPTEMBER 30, 2012

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. IPOs in 2008, the market was up to a still trivial 159 in 2011. After a record low of 39 U.S.

Exit Strategy 239

Exit Strategy IPO Investment Bankers Entrepreneur 239

Startup Professionals Musings

NOVEMBER 4, 2013

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. IPOs in 2008, the market was up to a still trivial 128 in 2012 (compared to 675 in 1996). After a record low of 39 U.S.

IPO 224

IPO Founder Exit Strategy Investment Bankers 224

Startup Lessons Learned

JULY 5, 2010

Brant and Patrick undertook a difficult challenge: to provide a generally accessible introduction to Customer Development, without diluting its impact or dumbing-down its principles. On the minus side, that has made it a wee bit hard to understand. I think theyve succeeded. The Entrepreneur’s Guide is an easy read.

Customer Development 166

Customer Development Developer San Francisco Customer 166

The Next Web

JANUARY 24, 2014

Beyond us claiming the first IPO ever, the Dutch could potentially claim (with a fair bit of imagination) history’s first ‘Super Angel.’ I believe it is our excessive urge to ‘act normal’ and disdain of ‘networking’ that dilutes our social glue. How to fix this? If we all do that we can form our own tech mafia!

Netherlands 143

Netherlands Technical Review Stock Silicon Valley 143

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. That’s the concept of what some call mathematical dilution. That is not economic dilution, but rather its opposite ( accretion ).

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

YoungUpstarts

MAY 6, 2019

If you are getting funded for the first time, which means that you have not diluted the shares of your company, you will be receiving Series A funding. It will be in millions and you will have to dilute your shares even further if you are aiming for another funding round. There is a complete process to go for an IPO.

Startup 113

Startup Technical Cofounder Merger Early Stage 113

Both Sides of the Table

SEPTEMBER 28, 2013

A cautious person wouldn’t try to pry people out of Twitter right before their IPO to” join my cause!!” Dilution / valuation. I hate when companies publish too much information about the total stock option allocations, the company valuations, the dilution faced in every round, etc. ” Yes.

Startup 417

Startup Dilution San Diego Stock Options 417

Startup Professionals Musings

JULY 5, 2011

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. companies made the IPO transition in 2009, out of thousands of startups. Only about a dozen U.S.

Exit Strategy 235

Exit Strategy IPO Entrepreneur Investment Bankers 235

Startup Lessons Learned

OCTOBER 26, 2009

Every time you listen to customers, you fear diluting your vision. Every time you listen to customers, you fear diluting your vision. ► August (2) SXSW Case Study: SlideShare goes freemium ► July (4) Case Study: kaChing, Anatomy of a Pivot Some IPO speculation Founder personalities and the “first-class man&# th.

Advisory Board 151

Advisory Board Customer San Francisco Lean 151

Startup Professionals Musings

OCTOBER 17, 2022

VCs tend to carry their partners much longer, in hopes of a big public offering (IPO) that could produce a windfall. This can cause early investor dilution, lower ultimate returns or leave the startup stranded. Super angels sometimes drive up valuations.

Angel Investor 342

Angel Investor Silicon Valley Venture Capital Portfolio 342

www.paulgraham.com

APRIL 28, 2010

In an IPO, it might not merely addexpense, but change the outcome. Those remedial actions can delay, stall or even kill the IPO. Of course the odds of any given startup doing an IPO are small.But not as small as they might seem. Whatkind of anti-dilution protection do they want? They just want to invest in this startup.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Startup Professionals Musings

JANUARY 19, 2020

VCs tend to carry their partners much longer, in hopes of a big public offering (IPO) that could produce a windfall. This can cause early investor dilution, lower ultimate returns or leave the startup stranded. Super angels sometimes drive up valuations.

Angel Investor 314

Angel Investor Silicon Valley Venture Capital Startup 314

Startup Professionals Musings

JULY 3, 2015

In reality, this option is a nightmare that can bump you out of the driver seat, dilute your equity and create a business entity you can’t control. For financial reasons alone, an IPO is a statistically rare phenomenon, happening just 275 times in 2014 , out of almost 500,000 startups.

IPO 120

IPO Initial Public Offering Entrepreneur Private Equity 120

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. Me: More dilution? Maybe an IPO – who knows? But people seem pretty focused on that number. Raising lower seems kind of like something is wrong. A down round? I thought it was a convertible note with a cap?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

NOVEMBER 6, 2020

It seems that most of you entrepreneurs I meet in my role as business advisor are convinced that starting a new business requires equity investors, exponential growth, and a plan to go public via IPO. With major investors, your equity and return is diluted and delayed. Use flexibility to match your lifestyle.

Small Business 311

Small Business Small Business Administration SBA Equity 311

YoungUpstarts

MAY 31, 2016

The single biggest reason that the average company struggles or even fails is due to their lack of focus and dilution of their greatest resource, which are people. Yes, cash flow is king and every start-up wants to achieve greatness or hit a sizable IPO, initial public offering sooner than later.

Technical Review 100

Technical Review Leadership Early Stage Initial Public Offering 100

Tim Keane

JANUARY 12, 2010

Next, they carefully consider the range of multiples being used today to value companies being acquired or doing IPOs in the market that the business is in.   A full ratchet anti-dilution clause is very unfriendly to entrepreneurs; it requires them to make up the entire difference in price from their own holdings.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Lessons Learned

JUNE 15, 2009

In fighting to have developers checking in code dictate production releases, you risk looking unreasonable and diluting a powerful message that everyone should agree on: "small batches of changes that are automatically and continuously tested" June 15, 2009 7:55 PM Matthew D Edwards said.

Continuous Deployment 167

Continuous Deployment Software Review San Francisco Lean 167

Feld Thoughts

MARCH 24, 2017

They’re a rare venture fund that doesn’t exercise pro-rata rights over the lifetime of an investment, meaning they dilute alongside company founders, which they believe better aligns their interests as seed investors with the entrepreneurs. The team at FC has structurally designed their firm around alignment to founders.

Founder 76

Founder LP Technical Review Seed Stage 76

Startup Lessons Learned

AUGUST 24, 2009

And as everyone’s attention starts to focus on those same indicators, their value is being diluted. We’ve learned that data can be used as a reality-check against vision without diluting the mission or reverting to “sum of all features&# focus groups. Which leads to the next problem: We need new status indicators.

San Francisco 113

San Francisco Lean Technical Review Distribution 113

Startup Professionals Musings

DECEMBER 27, 2014

VCs tend to carry their partners much longer, in hopes of a big public offering (IPO) that could produce a windfall. This can cause early investor dilution, lower ultimate returns or leave the startup stranded. Super Angels sometimes drive up valuations.

Angel Investor 260

Angel Investor Silicon Valley Startup Portfolio 260

Both Sides of the Table

SEPTEMBER 10, 2021

In 2001 companies IPO’d very quickly if they were working, by 2011 IPOs had slowed down to the point that in 2013 Aileen Lee of Cowboy Ventures astutely called billion-dollar outcomes “unicorns.” How little we all knew how ironic that term would become but has nonetheless endured. So in a way it’s self selecting.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

JUNE 17, 2017

That management team might have decided that they wanted to maintain more control of their company, didn’t want new board members and didn’t want to take dilution. Stock option grants dilute your ownership in the company. I also wouldn’t be so quick to say that Company B is run worse than Company A.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Startup Professionals Musings

DECEMBER 14, 2014

The downside is loss of control and financial dilution. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Babbling VC

OCTOBER 3, 2011

This is very difficult to do if you constantly have to worry about running out of capital in your fund or not having enough reserves to avoid dilution. If IPO's return, you basically will have two to three public markets you can sell into. Hypothesis 3: Insufficient diversification in European VC managers’ portfolios .

LP 82

LP Europe Germany Venture Capital 82

Feld Thoughts

FEBRUARY 28, 2023

However, the lack of a conversion right also has implications for anti-dilution protection: in the U.S., In Germany, anti-dilution protection is achieved by issuing additional preferred shares. IPO issues: Possibly the biggest problem for German venture-backed companies is the very low number of IPOs in Germany.

Germany 167

Germany Liquidation Preference Option Pool Advisory Board 167

Startup Professionals Musings

JULY 19, 2013

The downside is loss of control and financial dilution. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Startup Professionals Musings

AUGUST 10, 2019

The downside is loss of control and financial dilution. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

abovethecrowd.com

APRIL 20, 2016

The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate. In Q1 of 2016 there were zero VC-backed technology IPOs.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40