Both Sides of the Table

NOVEMBER 4, 2009

This is part of my Startup Advice series. at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small. BTW, this ignores liquidation preferences which actually mean you’ll earn less. Let’s face it. Let’s face it. That’s Ok.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

MARCH 3, 2013

Let me start by saying that Clayton is one of the most influential people on my thoughts about markets that led to both the concept behind my first startup and my main theses in investing. Startup Grind was a truly awesome conference and Derek the consumate host. ” No royalty paid until there is revenue.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

abovethecrowd.com

FEBRUARY 24, 2015

As a result, a “late-stage” financing is no longer reserved for high-revenue, pre-profitability companies getting ready for an IPO; it is simply any large round of financing done at a high price. You must subtract it from your top-line revenue. You should not pay a net revenue multiple for a gross revenue disclosure.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Gust

NOVEMBER 15, 2012

In my own portfolio I have companies that are generally perceived to be extremely successful with high profile customers and lots of sales…but they just happen to have a liquidation preference ladder of $25 million!

Seed Stage 131

Seed Stage Hockey Stick Cap Table Liquidation Preference 131

The Equity Kicker

JUNE 28, 2013

Otherwise the investors won’t make the multiple on their investment that they want and after liquidation preferences are paid the amount left for the entrepreneur may well also be disappointing. Company exits for £20m having raised £15m for 50% of the company in a 1x liquidation preference – the investor gets £17.5m

Liquidation Preference 116

Liquidation Preference Valuation Portfolio Operations 116

K9 Ventures

JUNE 5, 2015

So while the infrastructure cost and startup costs may have declined, the operating costs have increased. As the check size increases, investors tend to look for more traction, established revenue models, proven unit-economics, and other metrics that were previously associated with later stage companies.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Growthink Blog

MAY 23, 2011

With this capital, the company propels itself to $50 million+ in revenues, and to either a sale to a strategic acquirer or to an initial public offering. 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.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

David Teten

AUGUST 21, 2019

Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

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.” What hogwash.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

DECEMBER 11, 2022

Something happened in the past 7 years in the startup and venture capital world that I hadn’t experienced since the late 90’s — we all began praying to the God of Valuation. How might our next phase of the journey seem brighter, even with more uncertain days for startups and capital markets? What happened? There was no money train.

Valuation 466

Valuation San Francisco Ratchet Liquidation Preference 466

Up and Running

DECEMBER 30, 2015

Overestimating future revenue. I’ve been lucky enough to screw up by both funding my startup too early and too late. Founders should pay attention to the liquidation preference in the term sheet to ensure it does not become detrimental to them in a less than favorable exit. See Also: Rejected by Investors?

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

Both Sides of the Table

SEPTEMBER 2, 2009

We should end the year with a few million in fully recurring revenue and we’re projected to double next year. But more spend = more viral opps = more revenue down the road. >50% of our revenue in now viral. I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

ithacaVC

SEPTEMBER 20, 2011

Let’s say a given company has raised $15mm in VC funding and is generating about $3mm in revenue and starting to ramp up quickly. Furthermore, it is in an industry where M&A transactions typically happen in the 3-4X revenue range. Tough to argue that it is not reasonable. Worth some thought and discussion.

Liquidation Preference 49

Liquidation Preference Common Stock Stock Options Valuation 49

Spencer Fry

APRIL 17, 2017

As a startup in 2017, having limited resources can in and of itself sink your entire ship. There are so many people, products, and startups that are vying for their attention, that it’s harder than ever to rise above the noise. But as an early stage startup, accountability is so important. The quality bar has never been higher.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. How They Make Money: Majority of Kayak’s revenue actually comes from advertising on their site (55%), not lead generation or referral fees to travel suppliers as you might think (more on this below). Financial Snapshot: 2010 Revenue: $170 million. How To Think About The Future.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. Even if you sold for $20 million they’d be thinking “I have senior liquidation preference so I get my money back.”).

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Both Sides of the Table

APRIL 14, 2010

That means that the likely have a minimum of $15 million in liquidation preferences. It will usually be higher because the liquidation preference has a dividend so if the deal is long in the tooth assume that the liquidation preference might be $20-22 million. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

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

Gust

APRIL 16, 2014

Invested Interests business entrepreneur investor contract startup' But something like that would be way, way outside the norm. original post can be found on Quora @ [link] *.

Liquidation Preference 152

Liquidation Preference Revenue Entrepreneur Startup 152

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

dondodge.typepad.com

JANUARY 15, 2011

from David Dalka - Creating Revenue and Retention - Chicago GSB MBA As discussed in my recent post about a TiE event on Chicago start ups, there are many factors to consider when taking in funding and employees. This puts potential payout into perspective for those thinking about founding or working for a startup. Most startups fail.

Equity 40

Equity Employee Dilution Valuation 40