article thumbnail

Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. That’s normal.

Valuation 405
article thumbnail

The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand

Both Sides of the Table

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Trending Sources

article thumbnail

Praying to the God of Valuation

Both Sides of the Table

I was in it for the love of working with entrepreneurs on business problems and marveling at technology they had built. If they are private we still have fig leaves that cover us because some rounds might raise debt vs. equity or might fund with terms like multiple liquidation preferences or full-ratchets or convertible notes with caps.

Valuation 466
article thumbnail

Should Founders Be Allowed to Take Money off the Table?

Both Sides of the Table

A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal. We exchanged ideas when I was an entrepreneur along side him in NorCal in 05-07 and my point-of-view on founder / VC relationships hasn’t shifted even 1% since I went to the dark side. I believe this is wrong.

Founder 329
article thumbnail

Angel Investing 4 – Why You Need Deep Pockets to Win Big

Both Sides of the Table

This is the fourth article in a series on what it takes to be a great angel investor (and why this should matter to entrepreneurs). more senior to you) might be piling up liquidation preferences and tilting returns in their favor. Part 1 – Access to Great Deal Flow – is here. So know that going in.

Cap Table 283
article thumbnail

More on Liquidation Preferences

Altgate

→ More on Liquidation Preferences Posted on December 16, 2010 by admin A long time ago I had asked a VC about what pre-money valuation he was planning to put in a term sheet he had promised to send over. .&# He said it as a joke, but it is totally true that pre-money valuation is just one of a handful of key economic terms in a term sheet.

article thumbnail

How to Work with Lawyers at a Startup

Both Sides of the Table

I recently read a post over on VentureHacks titled, “ Top Ten Reasons Entrepreneurs Hate Lawyers &# written by Scott Walker (who blogs on legal issues for entrepreneurs ). Because many great entrepreneurs work with lawyers in registering their companies they have their ear to the pavement on the earliest of company formations.