Startup Professionals Musings

MAY 1, 2023

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Technical Cofounder 247

Technical Cofounder Equity Distribution Cofounder 247

Startup Professionals Musings

SEPTEMBER 10, 2018

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

Startup Professionals Musings

JULY 31, 2012

The simple answer is to find a business partner, not an “implementer,” who already has the technical experience you need, and is willing and able to run that side of the business. If you are an entrepreneur, like Andrew Mason , CEO of Groupon, with a degree in music and no technical business partner to be found, your job is a bit harder.

Technical Review 230

Technical Review Technology Founder Management 230

Both Sides of the Table

JULY 17, 2018

A firm like ours has almost 100 different investments across all the various partners so we get to see some businesses very intimately. You get to have interesting conversations with founders and review business plans and then see how these businesses evolve over the years.

Founder 242

Founder Dilution Software Review Later Stage 242

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. My recommendation to our lead partner looking at the deal, “Pass. It has awesome features that my main competitor doesn’t have. I can save tons of development time and I think I can buy it for all equity.

Merger 276

Merger Technical Review Early Stage Dilution 276

View from Seed

MAY 2, 2019

The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. My experience is that YC partners tend to encourage founders to hold off on taking more money shortly after getting into YC, arguing that their value will increase significantly in just a few months. The Pre-YC Pre-Seed.

Early Stage 214

Early Stage Dilution Valuation .Net 214

View from Seed

JANUARY 13, 2021

And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. We’ve had multiple companies in our early funds that hit bumps and had to raise flat rounds, which hurts from a dilution standpoint but doesn’t wipe out our position. So yes, seed funds will own less. But guess what?

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

Startup Professionals Musings

MAY 26, 2023

Make sure new solutions offered actually build your brand, rather than dilute it. This may require you selling exclusivity, doing channel development, or alliances with new partners. The cost of any new product these days must include education and rollout marketing, perhaps equal or greater than the development costs.

Product 354

Product Technical Review Artificial Inteligence Dividend 354

Both Sides of the Table

APRIL 27, 2010

But the firm that funded my first startup was loyal to me for having stuck around in what they knew to be pretty tough times and having suffered much dilution. That VC who saw me stick through hard times at my first company and get an exit at both companies is the firm where I’m now a partner.

Venture Capital 285

Venture Capital Hiring Software Review Stock Options 285

Both Sides of the Table

MARCH 11, 2011

Secondly, they had an owned & operated (O&O) website – Google.com – and Overture had shut down GoTo.com at the request of their very profitable and large distribution partners. Too many entrepreneurs focus on dilution. That gave Google a huge cost advantage.

Product 350

Product Tuvalu Dilution Incubator 350

Both Sides of the Table

DECEMBER 18, 2009

The first came from the CEO of iScraper telling me that they would not be able to complete the deal – their investor, Apax Partners, had decided not to proceed despite verbal assurances that they would. I then flew from London to Los Angeles to meet with the partners of GRP. And then I got a few disturbing calls.

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Agile VC

JULY 11, 2012

Some disgruntled younger partners left to go start a new firm in 1965 called Greylock. Some disgruntled younger partners left in the 90s to form what is now Redpoint Ventures (IT team) and Versant Ventures (healthcare team). Big success was Digital Equipment Corporation (DEC), in which ARD invested about $2.1M

Silicon Valley 240

Silicon Valley Carried Interest Cofounder Boston 240

Both Sides of the Table

FEBRUARY 25, 2010

We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. You need your key negotiating partner and both sets of lawyers. Yes, this was stupid.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

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

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. In a CTO Salary and Equity trends report by Safire Partners, it finds non-founder equity compensation to settle out below 2 percent. All of the estimates displayed above are figures prior to any dilution. percent to 3 percent range for engineer #1s.

Engineer 129

Engineer Dilution Option Pool Vesting 129

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. and trying to raise their next fund.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Genuine VC

JULY 19, 2010

Micro VCs will continue to come in many flavors with slightly different strategies, but there are a few distinctive defining characteristics: On a per partner basis, each investor is investing less than $25M in any given fund. The capital deployment velocity is notably higher than a traditional 1-2 investment per partner per year.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Both Sides of the Table

OCTOBER 12, 2014

People all across the value chain have taken notice including Limited Partners who are the people who invest in VC funds in the first place. 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. Why prorata rights are now sought out by LPs.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

View from Seed

AUGUST 17, 2021

It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 205

IRR Dilution Founder Portfolio 205

Both Sides of the Table

JANUARY 4, 2014

She started it with a partner, 50-50. It either needed to get more aggressive in pricing, pivot to a new business or business model or raise more capital (and take the dilution) in order to have more time to figure things out. They were close friends, lived down the road and members of our synagogue. We sat down the three of us.

Founder 340

Founder Cofounder Sacramento Technical Review 340

Startup Professionals Musings

AUGUST 11, 2021

For technical innovators, I often recommend finding a partner with deep business savvy. Starting a new business does put you in control, but you will face a harrowing new set of demands from partners, investors, suppliers, and customers. This is a clear case where one plus one equals three. New businesses are expected to be chaotic.

Dilution 428

Dilution Entrepreneur Merger Acquisition 428

View from Seed

SEPTEMBER 9, 2014

So when founders lose focus, they dilute their power and effectiveness, which diffuses the force of their impact. Do you need highly skilled functional managers or do you need a true partner? someone to be that true partner). This is why I encourage almost every startup founder to find a partner or a cofounder.

Hiring 336

Hiring Cofounder Startup Technical Cofounder 336

Startup Professionals Musings

AUGUST 24, 2016

The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Now comes the reality check.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Up and Running

JULY 2, 2014

Picking the right attorney in your startup is as important as picking the right business partner. My business partner and I made many mistakes in our first tech startup, and so many of them were the result of choosing a lawyer who was a terrible fit. My business partner and I were elated. ownership and never dilute.

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Both Sides of the Table

JULY 25, 2010

“Yes&# was given to me by one of my favorite angel investor / seed VC’s to work with – John Greathouse of Rincon Venture Partners and author of the blog InfoChachkie that you should check out because it is filled with great info from a guy who has been a very successful operator.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

The Next Web

NOVEMBER 20, 2013

George Deeb is the Managing Partner at Chicago-based Red Rocket Ventures , a startup consulting and financial advisory firm based in Chicago. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. You can follow George on Twitter at @georgedeeb and @RedRocketVC.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

View from Seed

AUGUST 17, 2021

It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 156

IRR Dilution Founder Portfolio 156

Both Sides of the Table

AUGUST 14, 2017

Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. In fact, as one Twitter commenter observed to what do board do, “Often, not much.” That’s true. The administrative work we actually do at board meetings?

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

VC Cafe

FEBRUARY 27, 2024

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). That’s yet another reason for micro funds to move earlier in the fundraising timeline.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

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. The right partner goes to bat for you during the recruiting process—helps you identify and court the hires that you look back at as key to your success.

Dilution 104

Dilution Equity Hiring Partner 104

Both Sides of the Table

FEBRUARY 20, 2019

just having a sparring partner with a vested interest in your success can be useful. The Limited Partners (LPs) who back funds don’t expect their dollars to be passive. For starters, the incoming CEO will demand between 4–6% of the company so shareholders will immediately face dilution. If you get a smart person on the board?—?just

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

The Startup Magazine

MARCH 14, 2022

A business plan is drawn up to attract investors and partners. The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. At this stage, the idea is pitched mainly to family and friends. 2) Laying out the genesis of the company. 3) Company formation. 4) Forming a company identity.

Technical Review 167

Technical Review Due Diligence India Startup 167

View from Seed

AUGUST 17, 2021

It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. at exit due to dilution. These first ten years have been pretty special personally.

IRR 136

IRR Dilution Founder Portfolio 136

Startup Professionals Musings

SEPTEMBER 5, 2015

They don’t understand that most great entrepreneurs, including Bill Gates and Steve Jobs, had a partner with complementary skills on the business or technical side. In fact, I challenge anyone to name a famous inventor in recent times who also built a successful business without one or more partners on the business side.

Entrepreneur 120

Entrepreneur Dilution Partner Distribution 120

View from Seed

DECEMBER 4, 2019

The trends described above in VC performance have an upstream effect on Limited Partners which is somewhat counter-intuitive. 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

thinkspace.com

SEPTEMBER 7, 2012

Should founders have anti-dilution rights? That’s where a good partner agreement comes into play. Not only do you want to allocate ownership, but you want to re-allocate ownership if either partner fails to deliver. How do you determine what the third partner’s equity share should be? . Five years?

Equity 62

Equity Employee Founder CTO Hire 62

YoungUpstarts

SEPTEMBER 16, 2015

by John Vrionis, partner at Lightspeed Venture Partners. Raise too much capital at any given stage and suffer more dilution than is necessary – obviously not ideal. John Vrionis is a partner at Lightspeed Venture Partners who focuses primarily on early stage enterprise and consumer technology investments.

Valuation 100

Valuation Dilution Chicago Technical Review 100