Genuine VC

FEBRUARY 9, 2011

Evaluating a startup as a prospective employee is tough, especially when you compare to VCs. Plus, VCs often will have met the Founder/CEOs of many of a particular startup’s competitors, so they’ll have an even richer understand of the market landscape. On one hand, of course, you’re joining a startup for the upside.

Startup 146

Startup Burn Rate Technical Review Down Round 146

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

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. My first institutional financing came from people who were in the “MIT” network.

Finance 205

Finance Silicon Valley Valuation Startup 205

Steve Blank

APRIL 26, 2022

Cram downs are back – and I’m keeping a list. At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose.

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Lightspeed Venture Partners

OCTOBER 7, 2012

As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. The company likely will run out of money well before it hits its projected Q4 sales ramp, which is why it needs an emergency financing today. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

For Entrepreneurs

APRIL 7, 2011

Introduction This post aims to help startup CEOs optimize their funding strategy by examining how investors value startups, and explaining how to avoid the common cash management pitfalls. Note: The concepts in this post will likely be obvious to experienced CEOs and entrepreneurs.

Finance 167

Finance Startup Cost Entrepreneur 167

Startup Professionals Musings

SEPTEMBER 14, 2010

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection. Marty Zwilling.

Term Sheet 227

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

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. I watched, participated, and suffered through every type of creative financing as companies were struggling to raise capital in this time frame. Until you are consistently generating positive cash flow, you depend on someone else for financing.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. These “IV drip” financings may reduce risk for investors, but put more pressure on founders. Anti-dilution protection.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Both Sides of the Table

SEPTEMBER 27, 2010

Industry change allows the entry of newer players at earlier stages – It doesn’t take as much money to launch a startup anymore. So in the past we needed VC to really get a startup going. If you invest it in startups you’re a VC professional money manager. We all know that.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.”

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

” “Mark has a vested interest in talking down valuations of startups.” Most prefer not to say this publicly for two reasons: 1) they have an entire portfolio of startups, many of whom are raising capital and 2) they prefer not to be attacked publicly or seem “anti entrepreneur.” goes into a startup.

Valuation 150

Valuation Down Round Startup Later Stage 150

VC Cafe

JANUARY 2, 2023

On a global level, venture financing of private companies dropped 33% year over year, from a record $733B in 2021 to $490B in 2022. A report by Greenfield Partners puts the total fundraising of Israeli startups at $15.16 Israeli startups 2022 funding summary. We started to see down rounds taking place especially in growth stage.

Valuation 158

Valuation Down Round Israel Venture Capital 158

Growthink Blog

MAY 23, 2011

The typical wisdom regarding the appropriate financing course for a new company goes as follows: 1. This venture capital financing - usually between $3 and $10 million - is the first of a number of rounds of outside investment over a period of three to five years.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

The Equity Kicker

JANUARY 22, 2014

Investors who paid up for your financing are not happy. You fall into the spiral of death: head of sales gets replaced (at least once), CEO gets replaced (at least once), a down-round financing happens (if lucky). Startup general interest Venture Capital'

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

ithacaVC

NOVEMBER 14, 2014

I have written about startup valuations previously. If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. A founder is about to raise their first round and asking me how to value their company. [1]. Here is a post from October 2012.

Valuation 69

Valuation Startup Down Round Early Stage 69

Both Sides of the Table

MARCH 30, 2016

Investors had grown too used to the idea that any deal you funded would get marked up to a higher valuation in the next round and that’s clearly not always true. Great companies get financed. Luckily we were never a unicorn so we didn’t have to have a destructive massive down-round that makes it harder (but not impossible) to get done.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. 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.

Marketing 70

Marketing Down Round Startup IRR 70

www.quora.com

SEPTEMBER 22, 2011

Type to Add and Search Questions; Search Topics and People Startups Startup Compensation Entrepreneurship Compensation Stock Options Major Internet Companies Silicon Valley Why is there such a large founder to early employee equity drop-off? Many startups these days are first-time entrepreneurs. is lowered. After that various i.

Equity 40

Equity Employee Founder Cofounder 40

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

Both Sides of the Table

JUNE 5, 2016

The funding environment for tech startups is an ever shifting ground as we go through predictable shifts that go hand-in-hand with the slowing of the overall market. Boom in Number of Startups. There was an explosion in number of startups both because it was cheap and there was tons of available capital.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Hunter Walker

AUGUST 8, 2023

Our estimates were not out of line with new data from top firms like USV who, according to reports, “ marked down the value of seven of its funds by nearly 26%.” Restructures, Down Rounds, and Pay to Plays. And fascinating new advances (and needs) in AI, climate, biology, etc are driving tech-IP driven startups.

Portfolio 105

Portfolio Cap Table LP Valuation 105

OnlyOnce

JANUARY 18, 2022

I lived one of my favorite metaphors last week as we announced the closing of Bolster’s Series B financing and had our first post-round Board meeting, and I realized I’ve never blogged about it before: that raising rounds of financing is like having a good night at the blackjack table.

Down Round 62

Down Round .Net Finance Startup 62

The Equity Kicker

JULY 9, 2015

I’ve been here before too, when implementing anti-dilution clauses after down-rounds. And we still have to get all parties to understand and buy into our spreadsheet so it isn’t over yet. It shouldn’t be necessary.

Dilution 60

Dilution Down Round Finance Software 60

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. Startups often get stuck, restart, pivot/change/move, etc., Here is a quick guide.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. I just worked on a financing for a company that received a term sheet from a group of VCs at a $7 million pre-money valuation. Home About Matt Client references Contact. A View from the Valley. — 23 Comments.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Bryce Dot VC

APRIL 21, 2016

“Why the Unicorn financing market just became dangerous…for all involved.” But, what about the customers who took the risk and started building, or running, their businesses on the tools and services offered by these fledgling startups? Achieving profitability is the most liberating action a startup can accomplish.

Silicon Valley 40

Silicon Valley Dilution Term Sheet Down Round 40

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Scalable Startup

OCTOBER 26, 2011

The Second Round, or “B Round”, or “Follow On” round can be the achilles heel of a startup. No doubt the first round of external funding for a startup is usually critical to a startup as it can be the difference between continuing your startup or shutting it down.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

Both Sides of the Table

OCTOBER 18, 2015

“Trade in an asset at a price that strongly deviates from an asset’s intrinsic value” The arguments against that, “This time the startups have real revenues!” In 2014 3 out of 12 exits were occurred at a lower valuation than the previous round. 25% “down rounds? ” ring hollow.

IPO 150

IPO Venture Capital LP SEC 150