Both Sides of the Table

SEPTEMBER 29, 2009

I’m not saying all their companies were bad but I guarantee you they spent an inordinate amount of their time on “triage” meaning trying to determine which companies to shut down, which to do “internal rounds” of financing and which were strong enough to try to raise external capital.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Feld Thoughts

FEBRUARY 9, 2016

I watched, participated, and suffered through every type of creative financing as companies were struggling to raise capital in this time frame. I’ve seen every imaginable type of liquidation preference structure, pay-to-play dynamic, preferred return, ratchet, share/option bonus, option repricing, and carveout.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

ithacaVC

JUNE 28, 2011

Let’s take the following hypo: you are the CEO of Company XYZ, and you just raised $2mm in a Series A financing. In the financing there are 3 institutional investors and 4 high net worth individuals. Let’s assume that future equity financings will be needed as usually is the case. Here are few: 1.

Warrant 53

Warrant Common Stock Liquidation Preference Institutional Investors 53

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Feld Thoughts

SEPTEMBER 8, 2010

In many cases, the consequences for not participating are significant and you can get a taste for this from the post on the term Pay-to-Play that my partner Jason and I wrote in 2005. Tags: Seed Financing angel seed VC.

Entrepreneur 133

Entrepreneur Angel Investor Early Stage Pay to Play 133

The Startup Magazine

AUGUST 2, 2019

Consumers rely on search engines and pay-to-play rating sites to find legal counsel. We are currently gearing up for our Series A round of financing, the first round from venture capital. (Share with us what problem you’re solving). Not much activity has taken place in the legal marketing space.

Founder 90

Founder New York City Cofounder Bankruptcy 90

Both Sides of the Table

SEPTEMBER 15, 2010

In these scenarios angels made great returns precisely because they didn’t need to dip their hands into their pockets a second or third time, their companies didn’t go bankrupt and they didn’t get buried in the cap tables by large VCs who put in “pay to play” provisions in tough times. So where are we now? It’s hard to say.

Angel Investor 284

Angel Investor Early Stage Cap Table Deal Flow 284

Feld Thoughts

JULY 14, 2015

Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. A company raises $1m of seed money from angels in a convertible note with a $6m cap. The company spends the $1m building and launching their first product.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Both Sides of the Table

SEPTEMBER 14, 2010

In both of these scenarios angels made great returns precisely because they didn’t need to dip their hands into their pockets a second or third time, their companies didn’t go bankrupt and they didn’t get buried in the cap tables by large VCs who put in “pay to play” provisions in tough times. So where are we now? It’s hard to say.

Angel Investor 152

Angel Investor Cap Table Early Stage Deal Flow 152

ithacaVC

FEBRUARY 20, 2011

It may explain why Fund Y tries to protect itself, via deal terms, from pay to play provisions that would kick in with respect to future financings.

Bridge Financing 40

Bridge Financing IPO Pay to Play Finance 40

Scott Edward Walker

JUNE 9, 2011

Conversion Rights What Are Conversion Rights? As many of you know, VC investors are typically issued shares of preferred stock, not common stock. Are There Other Instances When Conversion Rights Arise?

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Duct Tape Marketing

JANUARY 8, 2020

They don’t have peers to talk to where it’s safe to have conversations around finance or people. Now it’s wrapped around the pay-to-play side of it. It’s that agency owners are inherently kind of feel like they’re on an island by themselves. They don’t know who to ask about best practices.

Marketing 33

Marketing Management Hiring Community 33

Scott Edward Walker

JULY 27, 2011

Introduction For the past few months, I’ve been discussing the rights of VC investors in connection with preferred stock financings, including the following: liquidation preferences anti-dilution provisions dividends Board control protective provisions drag-along provisions pay-to-play and pull-up provisions conversion rights redemption rights All (..)

Delaware 49

Delaware Liquidation Preference Redemption Los Angeles 49

ithacaVC

DECEMBER 14, 2011

The “no mess” LP issue relates to investors in later rounds of financing (typically Series C and beyond). ” It may require a pay to play round that forced non-participants to convert to common (thereby lowering the aggregate LP) as an example. Ok, enough of the background. Things can get very ugly quickly.

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Both Sides of the Table

FEBRUARY 14, 2016

But if you’re a seed investor and you’re worried that the A-round won’t get done if your post-money is too high you suddenly start paying less. Why Financing in Falling Markets is So Damn Difficult. And so it goes. Back to my non-VC example. Call it high-stakes chicken.

Valuation 150

Valuation Down Round Startup Later Stage 150

Professor VC

MARCH 11, 2013

I'm surprised it is still around in 2013, but am sure the selectivity criteria has changed to whoever is willing to pay. The Launch Festival was Jason Calacanis' response to the pay-to-play of DEMO and other similar conferences. Hopefully, we can turn that fake investment to real financing.

Silicon Valley 28

Silicon Valley San Francisco Social Network SEC 28

blog.simeonov.com

FEBRUARY 22, 2010

However, founder agreements are not set in stone and it is common for them to be tweaked by a little or a lot during the first financing by professional investors. Sometimes, the vesting is milestone-based (upon the close of a financing) or performance-based (signing up customers, doing deals, recruiting). more details ].

Founder 44

Founder Vesting Agile Startup 44