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

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

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 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

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

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

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 77

Founder LP Technical Review Seed Stage 77

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 SBA Small Business Administration 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

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

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 178

Germany Liquidation Preference Option Pool Advisory Board 178

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

David Teten

JANUARY 19, 2021

The value ascribed by subsequent investors (in a secondary); buyers (acquisition); or the public markets (IPO). That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. . Volatile, uncapped.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

This is going to be BIG.

NOVEMBER 28, 2021

I’d like to see a startup come out and say, “We run at a speed that will allow you to accomplish a lot, but also have the same co-workers seven years from now when we IPO because we won’t burn anyone out. Take a little more dilution, raise a little more money, and spend on the most ignored personal goal in the market.

Hiring 187

Hiring Early Stage Marketing Term Sheet 187

Version One Ventures

SEPTEMBER 12, 2017

It has 10 times the market cap of SNAP, the most prominent IPO of 2017. Then, if you win the deal, you have major influence on the development of the start-up through negotiated governance mechanisms like board seats, information rights, anti-dilution rights, etc. And so, we keep hearing how venture capital is about to be disrupted.

Venture Capital 164

Venture Capital LP Dilution Limited Partner 164

www.mattbartus.com

SEPTEMBER 24, 2011

We will grant him/her X% fully diluted shares up front, and every time he/she makes an introduction, he/she will vest in 100 shares.” Matt is a lawyer representing technology companies through all phases of their lifecycle, from pre-incorporation, seed & VC financings, exit transactions and IPOs (read more). Thanks Casey!

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Version One Ventures

FEBRUARY 6, 2019

To make investments attractive, biotech founders also sell that the time to exit might be faster than in IT (it is true that successful therapeutics companies IPO or are acquired before launch) and that now, they can accelerate drug discovery with AI/machine learning (meaning, less time and thereby less capital is required).

Dilution 132

Dilution Artificial Inteligence IPO Valuation 132

Agile VC

MAY 9, 2014

Such an approach is common in Silicon Valley… Google, Facebook, LinkedIn, and others have dual-class equity structures which give the holders of one class of shares (typically founders) disproportionate voting rights relative to their fully-diluted ownership stake in the company. Companies like Ford and the New York Times Co.

Government 153

Government Silicon Valley China Cofounder 153

Startup Professionals Musings

AUGUST 19, 2017

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 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Austin Startup

NOVEMBER 25, 2018

My first day at Bazaarvoice was just a few weeks later, on May 2, 2005, and we built a company from inception to IPO on around $12m of capital use (out of the $24m we raised) in 7 years, creating over a thousand jobs and impacting clients all over the world?—?starting Below is a post I wrote on their Yahoo! Groups list on March 15, 2005.

Bootstrapping 48

Bootstrapping Austin Equity Cofounder 48