Lightspeed Venture Partners

OCTOBER 7, 2012

Week three’s breakdown covered topics like how hard momentum is to turn around, and how participating preferred stock works. This time I’ll break down week four of this season. 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.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

YoungUpstarts

JUNE 26, 2020

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. For some entrepreneurs, raising financing can seem like a full time job, particularly in these trying times. Unfortunately, much of this advice is wrong. Well not, wrong exactly.

Finance 205

Finance Silicon Valley Valuation Startup 205

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. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Outline multiple tranches.

Term Sheet 227

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

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. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Outline multiple tranches.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Feld Thoughts

FEBRUARY 9, 2016

Once again, as we find ourselves in the middle of a significant public market correction, especially around technology stocks, there’s an enormous amount of noise in the system, as there always is. I suffered through the next financing after implementing a complex structure, or a sale of the company, or a liquidation.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Gust

OCTOBER 17, 2011

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. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Outline multiple tranches.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

Both Sides of the Table

FEBRUARY 14, 2016

I wonder whether LinkedIn’s stock market plunge in January 2016 might have a similar effect (to a lesser magnitude because the underlying company is still great). But it was a shock to the system to see such a beloved tech stock get so ravaged on valuation in a single day. Why Financing in Falling Markets is So Damn Difficult.

Valuation 150

Valuation Down Round Startup Later Stage 150

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? Is there a difference between getting equity, stock, shares?

Equity 40

Equity Employee Founder Cofounder 40

Both Sides of the Table

MARCH 30, 2016

forward revenue for public comps (comparable stocks). We cut price and doubled down on an aggressive campaign to call back people who had been on the fence given the economic climate of prices dropping. Great companies get financed. FOMO was NOMO. As in no more.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Hunter Walker

AUGUST 8, 2023

At the time, this is last quarter and the stock market has trended upwards nicely since then (a potential leading indicator of private tech valuations), we all agreed venture portfolios were probably still 25-40% overvalued. Restructures, Down Rounds, and Pay to Plays. Whatever gets reported is just the tip of the iceberg.

Portfolio 118

Portfolio Cap Table LP Valuation 118

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

ithacaVC

FEBRUARY 23, 2012

Luckily, I am not in charge of the internal finance function at our fund. My easy solution for VC firms would be to mark up or down the valuation of investments based only on new independently led outside rounds of financing. While not as bad as water boarding, this exercise always makes my stomach turn.

Valuation 49

Valuation Institutional Investors Marketing Down Round 49

ithacaVC

FEBRUARY 1, 2018

The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. Or the economy tanks or stock market tanks moving valuations down at inopportune times for the startup. And sometimes founders want to protect the financial interests of FFAs.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

David Teten

AUGUST 7, 2019

The second strategy is Value Investing , a strategy which “seeks to maximize returns by finding stocks that are undervalued by the market…Investors assess a stock’s intrinsic value…and compare that value with the stock price. were clearly Momentum, but [in hindsight] they were also Value.”

Venture Capital 60

Venture Capital Valuation Stock NDA 60

www.mattbartus.com

DECEMBER 9, 2012

an option to purchase shares in the future at a pre-determined price) to the investor to purchase preferred stock at the Series A price. 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. Post-Money. Why else might this be useful? link] Brad Hargreaves.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

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

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. The same thing happened to many Internet stocks. By the first quarter of 2016, the late-stage financing market had changed materially. Their own ego is also a factor – will a down round signal weakness?

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Gust

SEPTEMBER 17, 2014

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. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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

Ben's Blog

JULY 16, 2013

In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. They might have said something ridiculous like: “Based on the current price of the preferred stock, your offer is already worth $5M.” As if the price could never go down.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

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

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

Ben's Blog

JULY 16, 2013

In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. They might have said something ridiculous like: “Based on the current price of the preferred stock, your offer is already worth $5M.” As if the price could never go down.

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Both Sides of the Table

OCTOBER 18, 2015

Mutual funds have poured large amounts of capital into what they perceive as the next peer group of public companies and one insider described it to me as simply “buying their IPO allocations now since they will need to own the stock once it’s public.” 25% “down rounds? is pretty pathetic.

IPO 150

IPO Venture Capital LP SEC 150