VC Cafe

OCTOBER 31, 2022

It’s a tough time for a lot of startup founders right now. Mature startups with proven business models and the potential to reach the public markets within a few years will be the safest place to park any new venture capital that comes into the ecosystem. Startups, Don’t Pin Your Hopes on VC Dry Powder ( Source ).

Founder 173

Founder Technical Review Down Round Liquidation Preference 173

crowdSPRING Blog

MARCH 13, 2014

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! It takes 3 years [before you know if your startup can be a real business] – crowdspring.co/1kK2ZJ8. Yahoo: Destroyer Of Startups | ReadWrite – crowdspring.co/1gY8bTY.

Social Media 96

Social Media Small Business Design Media 96

crowdSPRING Blog

MARCH 21, 2014

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! When Does Establishing a Good Startup Culture Outweigh Being Cheap? | Good read for entrepreneurs & startup employees on liquidation preferences – crowdspring.co/1neVvzy.

Social Media 93

Social Media Small Business Design Media 93

Startup Professionals Musings

JULY 11, 2021

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. In any case, your startup is now part of some investor’s portfolio, so you need to treat the situation like reporting to a new boss, and not like a new freedom.

Term Sheet 433

Term Sheet Advisory Board Liquidation Preference Startup 433

Both Sides of the Table

FEBRUARY 23, 2015

But not everybody has the right skills to build a highly successful and valuable startup from scratch. For some aspiring to be tech entrepreneurs, I often suggest a two-step process, as I argued in this post that “ The First Startup Founder You Need to Invest in Is You.” In fact, I would argue that most people don’t.

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

The Equity Kicker

NOVEMBER 9, 2016

It turns out that ‘time bomb’ is the much maligned and, I suspect, little understood, liquidation preference. To be clear, liquidation preferences are sometimes used badly and founders should generally turn away from investors who ask for multiple liquidation preferences.

Liquidation Preference 122

Liquidation Preference Silicon Valley Participating Preferred Common Stock 122

The Equity Kicker

OCTOBER 22, 2012

Focusing too much on the big vision and too little on the plan is an increasingly common mistake at startups. Betting too early on a billion dollar outcome and building up a big liquidation preference can turn what would otherwise have been a decent success into a failure. Without a credible plan to get there it’s just talk.

Liquidation Preference 134

Liquidation Preference Distribution Web Conversion 134

Steve Blank

MARCH 16, 2016

There are many reasons to found a startup. There are many reasons to work at a startup. To most founders a startup is not a job, but a calling. But startups require money upfront for product development and later to scale. Traditional lenders (banks) think that startups are too risky for a traditional bank loan.

Liquidity Event 120

Liquidity Event Founder Liquidation Preference Private Equity 120

Both Sides of the Table

JULY 25, 2011

When I first started as a startup CEO in 1999 there were no guides on raising venture capital. To this day I’m still surprised how few CEOs really understand the differences between 2x liquidation preference and a liquidation preference with a 2x cap. Every startup needs the knowledge in this book.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

Both Sides of the Table

MARCH 1, 2016

While there is much discussion about VCs starting to pull back on their investments into startups, the LPs we surveyed don’t expect to slow the pace of investment into VC funds themselves – at least for the foreseeable future. That’s money that fuels our startup ecosystems.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success.   At the financial level , and assuming a harvest of the investment in the company without the need for further financing, two terms stand out as driving economics: the dividend and the liquidation preference. Second a liquidation preference and a participation.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

SEPTEMBER 28, 2013

So as a startup CEO you constantly have to suspend disbelief. ” A startup CEO’s job is to absorb stress so the team doesn’t have to. Startups have to be optimists because no rational person would actually believe you could build Uber into the amazing company that it is today. We just need your $500,000!!”

Startup 417

Startup Dilution San Diego Stock Options 417

A Smart Bear: Startups and Marketing for Geeks

SEPTEMBER 8, 2010

It's nice to highlight awesome articles about startup that I didn't write! Startup Business Checklist 2010 [link]. Startup Business Checklist 2010 : Steve Smith's Blog. Below is my current checklist for startup businesses in 2010. How To Land a Killer Job At a Tech Startup Out of College - [link]. interintelli.

Liquidation Preference 216

Liquidation Preference Silicon Valley Startup Software 216

The Startup Lawyer

JANUARY 10, 2012

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., founders, option holders, etc.).

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

Startup Company Lawyer

MARCH 14, 2010

In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction. The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

JULY 3, 2014

As an Angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and then disappear into the sunset. In any case, your startup is now part of some investor’s portfolio, so you need to treat the situation like reporting to a new boss, and not like a new freedom.

Term Sheet 237

Term Sheet Advisory Board Liquidation Preference Startup 237

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. It has both a “full rachet” and “multiple liquidation preferences.” Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. Almost every startup needs an anchor.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Life Beyond Code

SEPTEMBER 27, 2011

Any startup that wants to fast-track to being ‘Silicon Valley VC ready’ should participate in this program.”. When we were looking to talk to investors, Sramana introduced us to multiple investors and acted as an advisor helping us to navigate complex term sheet clauses like tranche financing and liquidation preferences.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

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. If it doesn’t you’ll have done 3 startups by 26.

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. Watch the 30-minute interview to hear why but summary notes below.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

Both Sides of the Table

JUNE 14, 2010

Having raised too much money at my first company only to be buried under huge liquidation preferences and a huge board with divergent interests I have a bias for smaller funding rounds and capital efficiency. Tags: Startup Advice. Then there is the opposite problem, which is me. I obviously have my own biases.

Liquidation Preference 343

Liquidation Preference Chicago Operations Partner 343

Both Sides of the Table

MAY 30, 2015

When you do a convertible note with a cap that converts into the next round of funding one of the unintended consequences is that if you’re successful and raise at a larger price than your cap the early angels often get “multiple liquidation preferences” on their dollars in.

Liquidation Preference 150

Liquidation Preference Ratchet Angel Investor Entrepreneur 150

The Startup Lawyer

JANUARY 22, 2013

Depending on the delta between the price cap and the pre-money valuation of the qualified equity financing, the convertible note investors could receive a windfall in terms of liquidation preference. The Potential Problem Let’s say Series A investors invest at a pre-money valuation that [.].

Liquidation Preference 54

Liquidation Preference Pre-Money Valuation Valuation Equity 54

Startup Professionals Musings

SEPTEMBER 14, 2010

Liquidation preference. Tags: entrepreneur startup angel investment term sheet business. Angels may want the first right to purchase shares held by the other angels in the deal before they are sold to an outside party. This allows a committed angel to consolidate his ownership, rather than see it scattered to the wind.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

ithacaVC

DECEMBER 14, 2011

Continuing with the “No Mess” theme of commenting on things that give VCs pause, I thought it would be good to touch on liquidation preference. Specifically, “too much” liquidation preference (I will use “LP” for liquidation preference). Ok, enough of the background.

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Altgate

OCTOBER 8, 2009

Raising Capital: 5 Reasons Convertible Debt Sucks HOT The Collapse of the VC Ecosystem & What It Will Look Like Post Recovery 10 Tips On Negotiating With VCs Dating…er…Fundraising Etiquette The Science & Art of Term Sheet Negotiation HOT How Liquidation Preferences Work HOT How Much Money Should I Raise?

Term Sheet 39

Term Sheet Technical Review Michigan Liquidation Preference 39

abovethecrowd.com

FEBRUARY 24, 2015

Despite this, startups commonly highlight “gross revenue” even when 80+% goes out the door for every single transaction. Most private company financings involve the use of preferred stock with liquidation preferences. These liquidation preferences give the investor a debt-like downside protection.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Feld Thoughts

FEBRUARY 28, 2023

KG companies have decisive tax disadvantages for startups and are, therefore, rarely used in this area. Conversion right: In Germany, there is generally no conversion right entitling the holder of preferred shares to convert them into common shares at any time. BAND) and the Bundesverband Deutsche Startups e.V. GmbH & Co.

Germany 167

Germany Liquidation Preference Option Pool Advisory Board 167

Startup Professionals Musings

JANUARY 27, 2012

Liquidation preference. Angels may want the first right to purchase shares held by the other angels in the deal before they are sold to an outside party. This allows a committed Angel to consolidate his ownership, rather than see it scattered to the wind. It prevents the entrepreneur from selling early, at a loss to the investor.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Feld Thoughts

MAY 7, 2012

Down: Liquidation preference. In reality it mainly gives one the ability to know what’s actually going on, to the extent that anyone knows what’s actually going on in a fast moving startup. Up: Pro-rata rights. When things don’t go well (down), a VC wants to get their money out first.

Liquidation Preference 143

Liquidation Preference Term Sheet Search Entrepreneur 143

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

Up and Running

AUGUST 17, 2015

As I read stories of college dropouts who had successfully sold tech companies, or entrepreneurs with innovative ideas who made it big on Shark Tank, it became clear that there was no set path to startup success. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on).

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Both Sides of the Table

SEPTEMBER 6, 2010

That said, don’t complicate the topic – If you’re the founder of a company you likely know a lot about things like Liquidation Preferences and how they affect value allocations when the company is sold. Tags: Startup Advice. And I would opt for transparency. Then everybody loses.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

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

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

Altgate

JANUARY 5, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! Tips: $75 Killver VC Pitch Deck Not much to learn here. That’s actually about what I would have guessed had I not seen the Google Analytics numbers.

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28