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. Some even insisted that all prior preferred stock had to be converted to common stock. Why do VCs Do This?

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

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

Startup Company Lawyer

MARCH 14, 2010

In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction. To differentiate it from typical “Series A&# preferred stock, which comes with certain expectations with regard to rights. Legal fees.

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. I used to think a valuation was kind of like a stock price of a public company.

Finance 205

Finance Silicon Valley Valuation Startup 205

Startup Professionals Musings

SEPTEMBER 14, 2010

The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Venture capitalists and later round investors like the preferred convertible shares. Tags: entrepreneur startup angel investment term sheet business. Define equity type. Outline multiple tranches.

Term Sheet 227

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

A Crowded Space

DECEMBER 9, 2013

In VC: I see a fair number of deals that have reached some point of stagnation that are seeking a flat or down round. At one point, he had just 5 individual companies representing 70% of his public stock portfolio. I haven’t seen many startup railroads. . This is bad. Tread very carefully. .

Technical Review 68

Technical Review Deal Flow Balance Sheet Down Round 68

Startup Professionals Musings

JANUARY 27, 2012

The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Venture capitalists and later round investors like the preferred convertible shares. This does not mean that if you have eight Angels in your company, you will have to seat all eight of them on your board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. 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. Go read it now – I’ll wait.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

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

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.

Equity 40

Equity Employee Founder Cofounder 40

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

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. Valuations.

Portfolio 118

Portfolio Cap Table LP Valuation 118

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. forward revenue for public comps (comparable stocks). In this market some startups will understand “the trade” of a long-term W over short-term bravado.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

The Equity Kicker

NOVEMBER 20, 2015

That’s good news for both companies, because first day declines can sour a stock for months to come. So the share price has been trending down for some time before popping after the IPO. The interesting question for me is what this means for startup valuations more generally.

IPO 60

IPO Matching Ratchet Valuation 60

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., So not very good odds.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

A Crowded Space

MAY 31, 2016

We expect there to be an increase in down rounds, flat rounds, inside rounds and various pay-to-play scenarios. These inside rounds will lead to one of a few possibilities: 1) No insiders are supportive. These companies shut down. But, this year we’ve seen the greed of the last several years switch to fear.

Cram Down 60

Cram Down Pay to Play Angel Investor Warrant 60

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. 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. Home About Matt Client references Contact. A View from the Valley.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

NZ Entrepreneur

JULY 8, 2019

I made my first investment in the stock market when I was 12 years old. I waited for the ‘casino-like’ world of startup investing until I was 28 years old, putting $10,000 into a friend’s software distribution company – a tidy sum for me at that age. I killed it, everyone did. The ability and willingness to be coached.

New Zealand 53

New Zealand Entrepreneur Valuation Dilution 53

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. A lot of startups that end upgoing public didnt seem likely to at first.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

thebarefootvc

AUGUST 26, 2015

After a tumultuous week in global markets, today the US stock market ended higher on the session. As someone who invested through the 2001 and 2008 crashes I can assure you that down rounds and fire sales are not fun for anyone involved. and the Nasdaq (which includes Apple, Google, Intel and other tech stalwarts) gained 4.2%.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

AUGUST 26, 2015

After a tumultuous week in global markets, today the US stock market ended higher on the session. As someone who invested through the 2001 and 2008 crashes I can assure you that down rounds and fire sales are not fun for anyone involved. and the Nasdaq (which includes Apple, Google, Intel and other tech stalwarts) gained 4.2%.

Marketing 40

Marketing Investment Bankers Valuation China 40

Both Sides of the Table

SEPTEMBER 18, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. Less than you’ll probably grant your most junior employees in stock options? A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

abovethecrowd.com

APRIL 20, 2016

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.” Next came Rolfe Winkler’s deep dive “ Highly Valued Startup Zenefits Runs Into Turbulence. ”

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Scalable Startup

FEBRUARY 1, 2013

The Future of Startups 2013-2017, beginning of a series. Marc Andreesen gave a great interview about a year agi about “The Future of the Enterprise” and where the next startups will be playing – Hadoop, Big Data, BYOD, etc. Some of these next big startups are in L.A., We don’t have to sell our stock.

Software Review 22

Software Review Startup Venture Capital Stock 22

VC Cafe

MAY 29, 2022

Building on my post on ‘ Advice for startups in a downturn (May 2022 edition) ‘, this week I continued to follow with interest the impact of the current correction on startups and venture capital, particularly in early stage. Which Startup Investors Pulled Back The Most So Far In 2022? The bull market is over.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

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. Let’s start with the money slide: 10 years ago there was about the same money pouring into VC as found its way into startups but in the past two years 2.5

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Reid Hoffman

JUNE 8, 2021

As I’m sure most would agree, Airbnb is one of the most iconic startups to have been formed in the world. But I generally am not a fan of committees and things that get in the way of moving quickly in a startup. We took nearly 2% of the company’s stock, and we put it aside and we created, it was actually 9.2 Let’s go with debt.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

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. 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. Outkast, Ms.

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

Reid Hoffman

JUNE 8, 2021

As I’m sure most would agree, Airbnb is one of the most iconic startups to have been formed in the world. But I generally am not a fan of committees and things that get in the way of moving quickly in a startup. We took nearly 2% of the company’s stock, and we put it aside and we created, it was actually 9.2 Let’s go with debt.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

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

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. 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. Outkast, Ms.

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Hippoland

NOVEMBER 13, 2016

It takes a long time to see the results of a startup that does well. If a company sells for stock or partial-stock, then it’s more complicated, depending on whether the acquirer is a public company or a private company, and we don’t need to dive into that in this post. This is necessary but far from perfect.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Feld Thoughts

SEPTEMBER 9, 2015

Some will demonstrate strategically justifiable metrics and have fantastic ‘up round’ exits; others may see liquidation preferences kick in which will negatively impact founders and employees; others may fulfill the adage “IPO is the new down round” , which has been the case for more than half of the public companies on our list.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

VC Cafe

MAY 18, 2022

After a 13 year bull market run, anywhere you look in the stock market these days, it’s mostly RED. The tech companies that have been stock market darlings, breaking new records, are struggling, many missing analysts expectations. Down rounds are coming. Advice for startup founders (consolidated).

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

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 just two years the median round sizes for deals with mutual funds has more than tripled and the same phenomenon holds for hedge funds.

IPO 150

IPO Venture Capital LP SEC 150