Gust

SEPTEMBER 5, 2012

How to finance a new seed-stage startup? ” Ressi in particular seems to be passionate about removing the “debt” component from convertible debt seed financing transactions. .” I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For

Finance 134

Finance Convertible Security Equity Seed Stage 134

Steve Blank

JUNE 23, 2016

Disruptive innovations are coming from startups – Telsa for automobiles, Uber for taxis, Airbnb for hotel rentals, Netflix for video rentals and Facebook for media. Second, the leaders of these companies tended to be those who excelled at finance, supply chain or production. Startups are unencumbered by the status quo.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” To understand why, consider what would happen without such a provision if the startup turned out to be an overnight sensation acquired by Google for $30 million six months later.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Berkonomics

MARCH 9, 2017

I read several years ago, that the average startup restaurant lasts only about a year. Restaurant startups would not top my list. Attempting to get to the number of real failures for all startups, not just those with angel group investments, Fortune Magazine published an article claiming that 90% of these startups do fail.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

Hunter Walker

MARCH 8, 2014

If you’re graduating this spring and starting a career in tech, I’ve got one piece of advice: go work at a midstage startup (I’ll define that as B/C rounds of financing – eg Twilio, Stripe, Airbnb, Warby). Growth Creates Opportunity : Midstage startups are still very much under-resourced and expanding.

Liquidity Event 134

Liquidity Event Early Stage Seed Stage Startup 134

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). For those of you who fit that description, nice work.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

YoungUpstarts

MARCH 11, 2015

Startup companies are often cash poor and have little in the form of current monetary compensation to offer their employees. When does a startup company need a business valuation? Valuation is usually important for startup companies both for income tax requirements and accounting requirements.

Valuation 100

Valuation Stock Options CPA Merger 100

Berkonomics

APRIL 20, 2023

But… I read several years ago that the average startup restaurant lasts only about a year. Restaurant startups would not top my list. And this includes all businesses, not just startups. Although these are not parallel studies or similar statistics, most seem to refute Fortune’s claim that 90% of all startups fail.

SBA 62

SBA Angel Investor Early Stage Liquidity Event 62

Steve Blank

JULY 15, 2010

VC’s invested their limited partners’ “risk capital” in a portfolio of startups in exchange for illiquid stock. Most of the startups they invested in either died by running out of money before they found a scalable business model or ended up in the “land of the living dead” by never growing (failing to Pivot.). Startup Lifecycle Today.

Venture Capital 306

Venture Capital IPO Liquidity Event Entrepreneur 306

Women Entrepreneurs Can

NOVEMBER 19, 2022

A Venture Capital Firm is a firm that invests in startups and early-stage companies. Investing in a startup company carries a high degree of risk, particularly at the early stage. One of the most common ways of investing in a startup is by leveraging the expertise of a venture capital firm. Pre-Seed Investments. Seed Rounds.

Venture Capital 52

Venture Capital Early Stage Liquidity Event SEC 52

Gust

JUNE 7, 2014

The technical term for this is the “liquidation waterfall”, because on a liquidation event (whether good, as in a large buyout, or bad, as in a distress sale, investors (and others) get paid out in a specified order. Invested Interests company early stage funding investors startup starup'

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). But especially over the last decade, the opportunities to sell ahead of an outcome for the company multiplied dramatically.

Venture Capital 126

Venture Capital Cap Table LP Equity 126

Berkonomics

DECEMBER 17, 2020

Let’s take a few minutes to examine the kind of equity financing available to small or early stage businesses. If you have a virtual company with your employees working from home locations, as many startups do, it should be the location of the founder. Friends and family investors. Accelerators. Then there is venture capital.

Equity 62

Equity Finance Liquidity Event Angel Groups 62

The Startup Lawyer

JUNE 9, 2010

A startup’s Series A financing shouldn’t be a large liquidity event or salary payday for the startup’s founders. While a startup typically receives millions of dollars in a Series A, if too much of that $$$ flows guaranteed to the founders, various incentives get out of whack. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

Hunter Walker

AUGUST 24, 2014

Did I work any less hard the next day because of my liquidity event? It’s for reasons like these that I support getting startup founders some liquidity during their company’s first few years, perhaps as early as Series A financing when appropriate.

Founder 112

Founder San Francisco Liquidity Event LP 112

Up and Running

SEPTEMBER 20, 2021

Everything from liquidation rights of investors and total capital from lenders is listed in this cap table. Since almost all startups do not possess traditional debt lenders, the list usually consists of data of the shareholders and the percentage they own. The range of investments in a startup can vary from three to seven figures.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Early Growth Financial Services

JULY 10, 2014

Too often, entrepreneurs neglect planning for and managing personal finances as they focus on building their business, lining up financing, and steering toward an eventual liquidity event. One thing that’s probably not occupying much mind space as you’re building your company is managing your personal assets.

Liquidity Event 41

Liquidity Event Management Stock Options Founder 41

Pascal's View

AUGUST 28, 2010

The evidence: (i) Startups are responsible for virtually all the new jobs created in the United States since 1977 (Source: Kauffman Foundation). The Importance of Startups in Job Creation and Job Destruction bases its findings on the Business Dynamics Statistics (BDS), a U.S. GDP growth, the U.S. government dataset compiled by the U.S.

Venture Capital 56

Venture Capital America Initial Public Offering IPO 56

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). For you who fit that description, nice work. Taking this kind of money has a number of pitfalls you should be aware of.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

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

The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. Closing : Is there a specific date that the convertible debt financing will close, or will there be an open round of seed investment ? 2X/3X, etc.)

Term Sheet 62

Term Sheet Pre-Money Valuation Liquidity Event Warrant 62

Hunter Walker

NOVEMBER 20, 2013

US-based seed VCs rarely invest outside of the country (500 Startups is one exception) leaving a potential gap in the market for folks with international expertise. 3) The Alternate Liquidity Syndicate. Here are three types of AngelList Syndicates which I believe could be profitable for their investors and additive to the ecosystem.

Syndicate 100

Syndicate Syndication South America Cap Table 100

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) was spun out, and the valuation was set by that financing round.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

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. It is such a disconnect.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

David Teten

AUGUST 21, 2019

Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. But you also can’t run the company forever, since investors need a liquidity event. How Tech Startups Can Get Money and Support from the Fortune 500. How to Raise Capital for your Startup.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

A Crowded Space

AUGUST 26, 2013

It promises increased efficiency in the marketplace as worthy startups may be able to raise money faster and simpler than through traditional channels. The crowd funding platforms are well aligned with what low quality startups are looking for. And high quality startups will primarily continue to raise money from top-tier VCs.

Later Stage 87

Later Stage Equity Liquidity Event Vertical 87

Seeing Both Sides

SEPTEMBER 15, 2015

Israel has been branded the “startup nation.” Frequently cited as one of the world’s most vibrant innovation hubs, Israel boasts more startups per capita than any other country in the world. The bad news is that Israeli startups are struggling to scale. For good reason: A tiny country of only 8 million people — 0.1%

Israel 20

Israel Cofounder Technical Review United States 20

ithacaVC

DECEMBER 14, 2011

Yes, it is possible to issue preferred stock without liquidation preference, but that is rarely done. Rather, preferred stock has the right upon a liquidation event to get its money back (a 1X LP) or, sometimes, a multiple of its money back (for example a 2X LP). Ok, enough of the background. million balance. ($3

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

The Next Web

SEPTEMBER 29, 2013

In startup-land, people seem to think raising money is a signal that their business is sound and they should start scaling as soon as possible. The main challenge, as we’ll discuss below, is that startups need to internalize two conflicting attitudes. Weaknesses inside the founder team kill startups. The wrong reason to spend.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Up and Running

DECEMBER 6, 2010

You could also call it a liquidity event. So I suggest that we agree on the following about exit strategies: The exit is about money. Converting ownership, as in shares of ownership, into money. It’s not about going from one place to another. What exits is the money. Money exits. Investors exit with it.

Exit Strategy 71

Exit Strategy Liquidity Event Early Stage Entrepreneur 71

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). For you who fit that description, nice work.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Berkonomics

APRIL 3, 2014

We’ve spoken of financing a young company through friends and family, known as “inside angels.” If you are starting a virtual company with your employees working from home locations, as many startups do, it should be the location of the founder. All angel groups will want to see the founders in person at sometime early in the process.

Equity 92

Equity Finance Liquidity Event Angel Groups 92

www.vccafe.com

MARCH 11, 2013

Startup Resources (Updated Mar 2013). Venture Capital Cafe > Startup Resources (Updated Mar 2013). VC & Startup Resources. Seed Startups. VC Cafe covers early stage Israeli and European tech & mobile startups. Hundreds of startups featured since 2005, will yours be next? About VC Cafe.

Software Review 53

Software Review Technical Review Israel Startup 53

dondodge.typepad.com

JANUARY 15, 2011

It isnt always possible to have a competitive bidding situation at each financing round so here are some guidelines for funding sources and percentages. Friends & Family can usually raise between $30K and $300K and usually take an interest bearing note that is convertible into stock at the next financing. 5% Managers -.25%

Equity 40

Equity Employee Dilution Valuation 40

David Teten

MARCH 14, 2018

Another example is Correlation Ventures ($300M+ AUM), a VC firm which co-invests in financings with at least one other new outside VC. I’ve listed a few more below which require meaningful startup and ongoing costs. For more, see the Startup Studio Playbook. All of the strategies above have very modest fixed cost.

Private Equity 60

Private Equity Venture Capital Equity Cofounder 60