Today, in our series on convertible debt, we examine the conversion valuation cap. The cap is an investor-favorable term that puts a ceiling on the conversion price of the debt. The valuation cap is typically only seen in seed rounds where the investors are concerned that the next round of financing will be at a […]
As we start our convertible debt series, we’ll focus on the discount. Remember that a convertible debt deal doesn’t purchase equity in your company. Instead, it’s simply a loan that has the ability to convert to equity based on some future financing event (we’ll tackle the conversion mechanics in a later post.) Until recently, we […]
We’ve been overwhelmed by the support for our book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. As part of the experience of releasing the book, we’ve gotten the chance to interact with many new people interested in the venture capital and angel financing process. The most often requested additional topic that we don’t […]
Question: Does one need to switch an LLC to a corporation to raise VC funding? Would you recommend starting out as a corporation pre-money or as an LLC? The short answer is yes, you have to be a corporation to raise VC funding VCs will want you to be a C-Corp for a few specific […]
Dan Shapiro has an excellent post up titled What to do when an investor asks you for your business plan. In it he addresses something we missed in Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. In the section where we discuss business plans, we say: “We haven’t read a business plan in […]
Mark Suster (GRP) nails it with his post The Problem with Collecting Logos at Startups. He explains the problem with the following subtopics: Leaderless rounds Not enough skin in the game Nobody’s head on the chopping block Fights over follow ons Information leaks He also answers the question “is there any good case for taking a […]
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