Both Sides of the Table

NOVEMBER 9, 2014

Generally speaking in venture capital financings the legal documents will specify that only “major investors” (a threshold set in the agreement – which can be $500,000 investor or more). How party rounds can burn you if it takes time to find your groove. There is a reason for this.

SEC 352

SEC Venture Capital Early Stage Cofounder 352

David Teten

AUGUST 19, 2019

Since 2017 we’ve managed $3 million in revenue-based financing, which helps cash-strapped technology companies grow. In 2019 we partnered with several revenue-based lending providers, effectively creating a marketplace. “. According to John Borchers, Co-founder, Decathlon is the largest revenue-based financing investor in the US.

Revenue 60

Revenue Technical Review Software Review Equity 60

Both Sides of the Table

MAY 23, 2010

Often when startups who have raised venture capital need another round of financing they will turn to their existing investors to give them money before raising from outsiders. a loan) that is later converted to equity at the time of the next financing. It starts as a debt instrument (e.g.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

David Teten

AUGUST 19, 2019

Does the traditional VC financing model make sense for all companies? 2018 also had the fewest number of angel-led financing rounds since before 2010. John Borchers, Co-founder and Managing Partner of Decathlon Capital, claims to be the largest revenue-based financing investor in the US. Absolutely not.

Revenue 60

Revenue Term Sheet Founder Technical Review 60

David Teten

JANUARY 19, 2021

Similar to the explosion of seed funds in the past decade, we (and some limited partners too ) believe these Flexible VCs are on the forefront of what will become a major segment of the venture ecosystem. Further reading: The Evolution of Entrepreneurial Finance: A New Typology. Vocabulary for the New Risk Capital Landscape.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Steve Blank

JUNE 1, 2011

Investors get board seats to assure themselves and their limited partners that they are duly informed about their investment. 3) An experienced board brings an extensive network of customers, partners, help in recruiting, follow-on financing, etc. From a VC’s point of view there are two reasons for board meetings.

Silicon Valley 300

Silicon Valley Business Model Venture Capital Balance Sheet 300

YoungUpstarts

JUNE 13, 2020

Naturally, this comes with a long line of responsibilities, including the dreaded finances of salaries and taxes. But your business life and personal life aren’t one, so you have to stay on top of your personal finances, too, no matter how intertwined the two seem. Limited Partner. You know what happens then.

Bankruptcy 207

Bankruptcy Limited Liability Company Finance Limited Partner 207

David Teten

DECEMBER 3, 2019

A more efficient approach to fundraising than haphazard networking is to mine the data exhaust from the limited partner universe to identify those LPs most likely to find your fund attractive, and focus all your energy on them. Cobalt for General Partners helps GPs to optimize their fundraising strategy.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Steve Blank

JUNE 1, 2011

Investors get board seats to assure themselves and their limited partners that they are duly informed about their investment. 3) An experienced board brings an extensive network of customers, partners, help in recruiting, follow-on financing, etc. From a VC’s point of view there are two reasons for board meetings.

Silicon Valley 273

Silicon Valley Business Model Venture Capital Balance Sheet 273

Both Sides of the Table

SEPTEMBER 1, 2016

Scott Kupor of A16Z responded with a comprehensive overview of valuation methodology in a post that while accurate feels more targeted at sophisticated Limited Partners (LPs) who invest in funds. Because VCs tend to “mark to market” for private investments so you would often value a company based on the last financing.

Jordan 264

Jordan LP Cofounder Limited Partner 264

Both Sides of the Table

FEBRUARY 25, 2019

Here are some observations I have from this exposure: If a company moves from strength-to-strength with predictable outcomes, easy financings, low staff turn-over, limited competitive threats then the composition of the board probably doesn’t matter as much. I practice what I preach. kind of like a board for a VC firm).

LP 269

LP Startup Burn Rate Stock Options 269

Agile VC

DECEMBER 6, 2012

As most of you probably know, the vast majority of VC firms make investments out of funds structured as limited partnerships with a 10yr life. 1) LP Bases Change Over Time – Most healthy VC firms tend to have stable relationships with the limited partners investing with them.

LP 178

LP Balance Sheet Differentiation Limited Partner 178

Babbling VC

JANUARY 7, 2011

I personally believe that one of the major drawbacks to venture capital in Europe is chronic under-financing and people skirt around this issue. Hence, financing rounds have been smaller (roughly a ratio of 5 to 1 when comparing US to EU). Even Dropbox and Etsy have done far larger rounds to finance their growth.

Finance 76

Finance LP Europe Valuation 76

Eric Friedman

AUGUST 18, 2021

From who we hire to the way we go to market, from how we engage with our limited partners to how we engage with founders, it’s all about being very focused on quality and consistency so as to affect strategies to generate meaningful carry for ourselves and our limited partners. That scares me.

Silicon Valley 88

Silicon Valley Venture Capital Cofounder Africa 88

David Teten

JANUARY 11, 2020

They’re taking a $1m check from me, or giving $5m to me as a limited partner. Other coinvestors: Limited partners, other VCs who are coinvestors, private equity funds which are potential growth-stage investors, etc. But for B2B sales, meeting people in person is often mandatory. This is hosted by NFX.

Social Media 60

Social Media Technical Review Media Private Equity 60

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. My suggestions for the investors seeking emerging companies to back?

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

David Teten

FEBRUARY 7, 2012

From the point of view of a limited partner, the great challenge is scaling the business. Our finance team acts as an outsourced CFO. They’re also inflation-hedged. As a result, various analyses have shown annualized median returns for the industry of 18-37% , 27% , and 30%.

Early Stage 148

Early Stage Private Equity Portfolio Aggregator 148

Both Sides of the Table

OCTOBER 1, 2009

But you can’t keep your pocketbook on the sidelines forever and still expect LPs (limited partners or the people who invest their money in VC funds) to pay you 2% management fees every year. So eventually the money has to start flowing.

IPO 255

IPO Investment Bankers Venture Capital Marketing 255

www.paulgraham.com

APRIL 28, 2010

My relationship with my cofounder went from just being friends to seeing each other all the time, fretting over the finances and cleaning up shit. 5 ]Some VCs seem to understand technology because they actuallydo, but thats overkill; the defining test is whether you can talkabout it well enough to convince limited partners. [

Technical Cofounder 110

Technical Cofounder Startup Cofounder Founder 110

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

K9 Ventures

MAY 14, 2011

They are still individual investors, they invest on a full-time basis as professionals, but they have funds with Limited Partners. The limited partners may themselves run the gamut from individuals, family offices, venture capital funds to institutional LPs. Pooled resources or Limited Partners.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Accredited Investor 125

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. This is uncharted territory.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Berkonomics

AUGUST 10, 2023

Draconian terms? The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.

Liquidity Event 116

Liquidity Event Initial Public Offering Dividend Valuation 116

The Startup Magazine

MARCH 22, 2019

Venture capitalists act as limited partners, providing help to build successful companies in a market they have deemed has potential. Small business loans and crowdfunding will also finance a start-up business. Investor Involvement. Many entrepreneurs fund their ventures through their own savings.

Angel Investor 153

Angel Investor Venture Capital Accredited Investor Equity 153

The Equity Kicker

FEBRUARY 28, 2014

I’ve just re-read the a 2012 report by the Kauffman Foundation about the contractual relationship between venture capital funds (often called GPs, short for General Partner) and their investors (often called LPs, short for Limited Partners). Both of these seem very reasonable to me.

Venture Capital 108

Venture Capital Limited Partner Portfolio Partner 108

Feld Thoughts

JUNE 19, 2013

Often, entrepreneurs don’t build a board until they are forced to by their VCs when they raise their first financing round. And they have a fiduciary responsibility to their own limited partners. At the end of the day, your board is not your friend.

Early Stage 143

Early Stage Limited Partner Global Entrepreneur 143

Berkonomics

JUNE 15, 2017

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

David Cohen

SEPTEMBER 13, 2019

Further, I thought it would also be appreciated by her more sophisticated high net worth investors, because many of them will have personal financing reporting prepared quarterly by a family office or personal accountant or tax planner. So, like any other engineering minded person would do, I decided to gather some data.

Management 90

Management Limited Partner .Net Finance 90

Steve Blank

MARCH 22, 2009

Their VC firm, In-Q-Tel , has been in business for 10 years, and like most VC firms they have an annual event where they show off their new portfolio companies to their limited partners and other VC partners. We witness similar behavior in corporate finance.

Silicon Valley 270

Silicon Valley Thailand RSS Venture Capital 270

This is going to be BIG.

SEPTEMBER 19, 2012

million of limited partner commitments--a huge and exciting first step. Two Sigma is a technology and finance company in Soho filled with incredibly bright engineers and developers, so I’m really excited about leveraging that partnership in a number of cool ways.

LP 112

LP New York City New York Chad 112

ReadWriteStart

JUNE 13, 2011

Investors get board seats to assure themselves and their limited partners that they are duly informed about their investment. An experienced board brings an extensive network of customers, partners, help in recruiting, follow-on financing, etc. From a VCs point of view there are two reasons for board meetings.

Silicon Valley 117

Silicon Valley Balance Sheet Metrics Early Stage 117

Berkonomics

JANUARY 27, 2010

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

Babbling VC

NOVEMBER 4, 2011

They will pool money amongst "friends and family" as well as their own capital to finance new deals. My partners offered a great opportunity to continue my career in venture on the private side of things. They have decided to continue looking at new investments after the current fund is invested.

Portfolio 70

Portfolio Limited Partner Cofounder Early Stage 70

Austin Startup

JULY 23, 2010

The company announced that is just completed $13M in financing from existing investors SMH Private Equity Group, ABS Ventures, Austin Ventures, and Trellis Partners. These are some things to think about when pricing products dynamically, but I’m sure Zilliant’s products are not just focused on realtime web.

Balance Sheet 67

Balance Sheet Private Equity LP IPO 67

Feld Thoughts

JUNE 25, 2015

Our deeply held beliefs are fundamental to our values, although we are comfortable challenging them regularly to make sure they are deeply held, and make modifications on occasion when we learn new things but only after a lot of thought and discussion, among ourselves and with several of our very close limited partners.

Syndication 70

Syndication Syndicate Limited Partner Finance 70

ithacaVC

JULY 10, 2013

Here is the good news: if you read my prior posts and Fred’s post, I think you are about 99% of the way there in solving any mystery behind startup valuations for early stage financing rounds (i.e., Series Seed or Series A).

Valuation 49

Valuation Startup Limited Partner Early Stage 49

ithacaVC

FEBRUARY 23, 2012

Luckily, I am not in charge of the internal finance function at our fund. Some VC firms use the art of Level 3 inputs to mark up their valuations, which has a tendency to make limited partners happy. It is the time of year when VC firms do year end valuations for their portfolio company holdings.

Valuation 49

Valuation Institutional Investors Marketing Down Round 49