When a startup raises venture capital, founders usually focus first on valuation, dilution, and how much money will enter the company’s bank account. But another part of the deal can influence the company for years: board seats. A venture investor may ask for the right to appoint a director as part of a financing round. … Read more
Startup ownership often begins simply. Two founders create a company, issue shares to themselves, and perhaps reserve some equity for future employees. Then the company starts raising money, granting options, signing SAFEs, and bringing new investors onto the cap table. Suddenly, figuring out who owns what becomes much more complicated. A startup capitalisation table, usually … Read more
When founders start a company, the ownership structure often looks wonderfully simple. Two founders might own 50% each, or a solo founder may initially control almost the entire business. Then fundraising begins. New investors receive shares, employees get stock options, SAFEs convert into equity, and additional financing rounds introduce new shareholders. Before long, a founder … Read more
Receiving a venture capital term sheet can feel like a huge moment. After weeks-or months-of pitching investors, someone is finally saying, “We want to invest.” Then you open the document and see phrases like pre-money valuation, liquidation preference, protective provisions, anti-dilution, option pool, and pro rata rights. Suddenly, the exciting part feels a little more … Read more
A great startup pitch can make an investor excited. A great venture capital investment memo has a different job: it helps the investment team decide whether that excitement is actually supported by evidence. An investment memo is a structured document that brings together the most important information about a potential deal. Depending on the VC … Read more
How can a startup with little revenue-and sometimes no profit at all-be worth $5 million, $10 million, or even more? That question sits at the heart of venture capital valuation. Valuing an established business can involve years of revenue, profit, assets, and cash-flow data. Early startups usually offer much less historical information. Investors may instead … Read more
Startup investing is full of exciting stories. A founder might describe a huge market, impressive technology, and a vision to transform an entire industry. But sooner or later, venture investors have to move beyond the story and look at the numbers. That is where startup metrics become important. Metrics help investors understand whether customers are … Read more
A startup can have an exciting product and a huge market, but venture investors eventually need to answer another important question: Can this company actually become a strong business? That is where the business model comes in. A startup business model explains how the company creates value for customers, delivers its product or service, generates … Read more
A startup can have a clever product, an impressive founding team, and even enthusiastic early customers. But venture investors will still ask a fundamental question: Is the market big enough to build a valuable company? That question matters because venture capital funds generally look for businesses capable of rapid growth. The U.S. Securities and Exchange … Read more
Getting investors interested in your startup is exciting, but a funding round is not finished just because someone says, “We want to invest.” The final stages can involve some of the most important work in the entire fundraising process. Founders may need to complete due diligence, negotiate final legal terms, update the cap table, collect … Read more