Both Sides of the Table

FEBRUARY 8, 2016

We entrepreneurs have been spinning that line for decades in every boom cycle. If you can get a round done at the price you expect – well done. Don’t assume that you can “just do a down round” if necessary. Down rounds are corrosive. This prudence is smart and welcomed.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

crowdSPRING Blog

FEBRUARY 21, 2014

How You Get Slaughtered in a Down Round: When Taking Venture Capital Doesn’t Go as Planned – crowdspring.co/MvF29W. Facebook and WhatsApp: The Nineteen-Billion-Dollar App – crowdspring.co/1jOdRlK. DHL Pranked UPS Into Advertising For Them – crowdspring.co/1jOeA6v. “If you want to sell ads, sell ads.

Social Media 92

Social Media Small Business Design Media 92

Lightspeed Venture Partners

OCTOBER 7, 2012

This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Genuine VC

FEBRUARY 9, 2011

And there are many reasons why a not-as-blue-chip investor would be in a company with real promise: prior relationships he has with the entrepreneur, specific domain expertise/understanding of a sector, capital requirements for the business, or other dynamics around the round (price, hustle).

Startup 146

Startup Burn Rate Technical Review Down Round 146

Startup Professionals Musings

NOVEMBER 25, 2020

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. These groups are now largely run by volunteers at no cost to entrepreneurs. Lack of checks and balances on startup valuations.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. A good way to think about valuation in seed/pre-seed is to reverse engineer the next round. What should we keep and what should we change? Embrace a frugal mindset: cashflow is king.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Feld Thoughts

FEBRUARY 9, 2016

And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. We entrepreneurs have been spinning that line for decades in every boom cycle. Then, if you end up doing a down round, it suddenly matters a lot. It’s simply not true.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. But some dilution is almost inevitable.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Startup Professionals Musings

JANUARY 27, 2012

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. But some dilution is almost inevitable.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Both Sides of the Table

SEPTEMBER 27, 2010

These days that’s not the case and it’s a great outcome for entrepreneurs and for innovation. A: Only because it’s a nicer branding for entrepreneurs. I totally agree and have been arguing this to entrepreneurs for years. I always counsel young entrepreneurs to start on the local train.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

Startup Professionals Musings

AUGUST 6, 2023

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of angel investment groups and venture capital organizations. That’s not as high as the failure rate with professional investors, but it should convince entrepreneurs that crowdfunding is still no panacea for funding.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

ReadWriteStart

JANUARY 13, 2024

Consequently, some startups have faced struggles securing investments, resulting in down rounds where their valuations decline between funding rounds. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. But some dilution is almost inevitable.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

Both Sides of the Table

FEBRUARY 14, 2016

I’d like to explain as best I can my opinion on what is going on because most of what I hear from entrepreneurs is not only wrong but is reminiscent of what I heard in 1997-2000. ” “This will be great for VCs and bad for entrepreneurs.” What is the True Sentiment of VCs? ” “Sure, prices are dropping.

Valuation 150

Valuation Down Round Startup Later Stage 150

YoungUpstarts

JUNE 26, 2020

The real issue here is that if an entrepreneur comes in to a pitch and goes on and on about how they’re going to build a billion dollar company in just a few years, most investors eyes tend to glaze over. Like Jerry Yang who started Yahoo, as investors we are looking for entrepreneurs who are obsessed with a new technology.

Finance 205

Finance Silicon Valley Valuation Startup 205

Startup Professionals Musings

MAY 20, 2016

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. These groups are now largely run by volunteers at no cost to entrepreneurs. Lack of checks and balances on startup valuations.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A Given that the Series Seed is issued at a fairly low valuation, anti-dilution protection is probably not that important, as a “down round&# from a low valuation in the Series Seed is unlikely.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

www.quora.com

SEPTEMBER 22, 2011

The barrier between entrepreneur and money (incubators, angels, etc.) Connections seems to make the most sense with serial entrepreneurs (or someone who had prior success). Many startups these days are first-time entrepreneurs. The risk to the entrepreneur is that he loses several tens of millions of dollars in opportunity cost.

Equity 40

Equity Employee Founder Cofounder 40

Growthink Blog

MAY 23, 2011

An entrepreneur starts a company in classic " bootstrap " fashion - with a combination of sweat equity and their own financial resources. 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. All live happily ever after.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Both Sides of the Table

JUNE 5, 2016

But there are two major trends worth understanding that most VCs know by now and I suspect most entrepreneurs do not. That is simply because we see 20–25 deals / year across our funds (new and follow-ons) and entrepreneurs usually see 1 deal every 2 years. VC Infighting. I’ve seen this a bunch in the past 12 months. Choose wisely.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

This is going to be BIG.

SEPTEMBER 7, 2012

Here are the top things I hear about follow ons and why they don't make a lot of sense to me: 1) You need to have follow on capital to protect your investments in case of a down round. If you're doing seed deals, how often does a down round in a seed deal even happen? Down from what?

Later Stage 99

Later Stage Down Round Pre-Money Valuation Early Stage 99

Feld Thoughts

APRIL 21, 2016

Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?

Marketing 70

Marketing Down Round Startup IRR 70

Berkonomics

MARCH 15, 2012

In the creation of a new enterprise, there are five principal risks to be addressed by the entrepreneur. So it is important for the entrepreneur to identify, address and mitigate each of these in order to increase valuation and decrease the risk of ultimate loss of the business. And fifth: Competitive risk.

Valuation 80

Valuation Down Round Demand Management 80

NZ Entrepreneur

JULY 8, 2019

In the first of a three part series on early stage business investment, we asked serial entrepreneur and investor Josh Comrie what three key things New Zealand entrepreneurs must get better at when it comes to seeking angel investment. I personally funded my first ventures, then led the two rounds that have seen Ambit take in $2.2m

New Zealand 49

New Zealand Entrepreneur Valuation Dilution 49

NZ Entrepreneur

SEPTEMBER 16, 2020

If a startup expects $1M in sales revenue but only gets $100k and they haven’t got a backup plan, they may face a down round or in the worst case liquidity concerns. The post Sensitivity Analysis key in startup financial projections appeared first on NZ Entrepreneur Magazine. Underestimating costs. Follow on LinkedIn.

Startup 86

Startup Sales Cycle Down Round Revenue 86

Tim Keane

AUGUST 20, 2009

Who the entrepreneur takes money from (see this post ) is always more important than the terms. "  The problem has been that too-high valuations and too generous terms have spawned painful down rounds that squash the entrepreneur and his early investors.    If the entrepreneur can bootstrap.

Milwaukee 60

Milwaukee Bootstrapping Cram Down Deal Structure 60

Seeing Both Sides

JANUARY 9, 2009

Seeking to assuage the nervous entrepreneurs amongst the portfolio companies that were in attendence at his networking lunch reception, he assured them, "We [Intel Capital] intend to continue forward and be very supportive of your down rounds this year". But Intel Capital will be happy to invest in their down rounds.

Down Round 20

Down Round Forecast Portfolio Government 20

Berkonomics

MARCH 5, 2020

In the creation of a young company, there are five principal risks to be addressed by the entrepreneur. So, it is important for the entrepreneur to identify, address and mitigate each of these in order to increase valuation and decrease the risk of ultimate loss of the business. And fifth: Competitive risk. .

Valuation 62

Valuation Down Round Early Stage Demand 62

Both Sides of the Table

JUNE 30, 2016

And if you raise the “5 on 20” and don’t grow into your next-round valuation you’re stuck because venture investors HATE doing down rounds. Internally at Upfront it’s an entrepreneur who has enough of a proven track record that they can raise a $5–10 million A-round based on their prior experiences.

Pre-Money Valuation 292

Pre-Money Valuation Valuation Early Stage Startup 292

Tim Keane

SEPTEMBER 17, 2009

Third, angels in particular have had unpleasant experiences with second rounds that are venture led where down-round terms are painful and expensive. All of that leads to a tighter money supply which tends to drive down prices. All of that leads to a tighter money supply which tends to drive down prices.

Wisconsin 60

Wisconsin Valuation Angel Investor Startup 60

Altgate

JANUARY 9, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Be Glad You Are An Entrepreneur! Why I Canceled My CO2stats Account → Quote Of The Day Posted on January 9, 2009 by fnazeeri We intend to continue forward and be very supportive of your down rounds this year.&#

Down Round 31

Down Round Venture Capital Partner Entrepreneur 31

Both Sides of the Table

SEPTEMBER 28, 2014

In a world where the economy only heads in one direction (read: 2009-2014) most investors & entrepreneurs forget to pay attention to gross burn. But while Net Burn is the more critical figure at first blush and what most investors will focus on, Gross Burn is not irrelevant.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

www.mattbartus.com

DECEMBER 9, 2012

My question is, can you elaborate on the benefits you see for the entrepreneur in trying to sell this to the investors? Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Hi Matt, Interesting technique and makes sense. link] Brad Hargreaves.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Berkonomics

MARCH 14, 2019

Especially if you are in the early stage of growing a business, these five risks can and often do derail entrepreneurs before realizing the riches of a great exit. Of course, we are speaking of increased valuation of your company when we speak of “wealth.” So, let’s examine them and mitigate them. Make you wealthy someday.

Valuation 48

Valuation Down Round Early Stage Demand 48

thebarefootvc

JULY 26, 2015

After the market downturn on Monday I set several limit orders – primarily on tech holdings that I wanted to increase positions in – in my personal account and went back to meeting with entrepreneurs. Resilient entrepreneurs confront challenges quickly, and utilize all the resources at their disposal to overcome them.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

AUGUST 26, 2015

After the market downturn on Monday I set several limit orders – primarily on tech holdings that I wanted to increase positions in – in my personal account and went back to meeting with entrepreneurs. Resilient entrepreneurs confront challenges quickly, and utilize all the resources at their disposal to overcome them.

Marketing 40

Marketing Investment Bankers Valuation China 40