Cutting Up the Founder’s Pie. The Founders’ Pie Calculator By Frank Demmler Several weeks ago, we took a look at the founders’ pie.
I noted that frequently the founding team divides 100% by the number of founders. I also cautioned that this is the WRONG WAY! I then went on to identify the factors that should be considered when making these decisions. Since then, I have had several people tell me that while what I wrote certainly made sense, it wasn’t very helpful. As a public service, I have “invented” a Founders’ Pie Calculator. Its primary benefits are that it provides a way to quantify the elements of the decision making process, and that it appears to be logical and fair. Let’s revisit the factors that should be considered. Idea. The Great Startup Game: How to Close Angel Investors. How to Kill the Angel Investor "Deal-Killers" Have you experienced the frustration of dealing with a self-proclaimed "interested" angel investor who you just cannot close, no matter how hard you try or how many months go by?
If you have, read on. After writing last month about angel investment "Deal-Killers," I received a slew of emails and calls from frustrated and angry entrepreneurs unable to close deals with angel investors. Many of them had invested more than a few months talking to investors who had repeatedly expressed a commitment to invest. Yet every attempt at closing the deal had ended in frustration. As pointed out in the previous post, the resistance often stems from the angel investor's uncertainty over how they will get their money back plus any profit that may have accrued. SeriesSeed.com.
Daniel R. Odio - Hardcore LifeHacker Entrepreneur in Silicon Valley. Fundraising Cribsheet: George Zachary of Charles River Ventures Speaks To Entrepreneurs. Fundraising Crib Sheet: Shai Goldman of Silicon Valley Bank on 'how to find your way in the Valley' I just sat down with Shai Goldman, a Director at Silicon Valley Bank.
My interview with Shai is the second in a series of interviews I'm doing to help entrepreneurs raise funds in the Valley. (The first one was with Naval Ravikant of AngelList) As someone who's new to the valley myself, I've found the experience to be interesting, engaging and yet complicated in very subtle ways. I'm hoping to help others who have the will and desire navigate Valley politics and culture more quickly and effectively through these blog posts. Consider it a "pulling back of the curtain" so to speak, to the extent I'm able to do so. Ted Wang and Andreessen Horowitz try to reinvent the seed round. An attorney and a group of early-stage investors published a set of documents last night called the “series seed” documents, a set of contracts for raising a small, seed round of funding.
Ted Wang of law firm Fenwick & West first called for a streamlined early funding process in 2007, with an editorial for VentureBeat titled, “Reinventing the Series A.” The problem, he said, is that the legal hassles and costs don’t change much between a large, institutional venture round and a much smaller seed investment — but it doesn’t really make sense to spend tens of thousands of dollars on legal fees if you’re only raising $500,000. Venture Deal Terms Studies Hint Worst Is Over - Venture Capital Dispatch. ByScott Austin Two Silicon Valley law firms, Cooley Godward Kronish and Fenwick & West, are out this week with reports analyzing the terms of venture financings in the fourth quarter.
While the firms canvassed different pools of venture deals, the results suggest similar conclusions: 2009 flat-out stunk for venture-backed companies, but the fourth quarter brought some optimism. Cooley Godward analyzed 98 completed deals nationwide in the fourth quarter, while Fenwick & West looked at venture financings for 112 companies headquartered in Silicon Valley. As we’ve done before, here’s a breakdown of some of the reports’ key components. Happy Friday reading! ValuationsCooley: Median pre-money valuations for all rounds of financing were higher in the fourth quarter than in the first three quarters. Fenwick: No analysis provided here.
Fenwick: Similar numbers as Cooley: The percentage of up rounds was at 47% in the fourth quarter, compared with 53% for down (30%) and flat rounds (23%) combined. Website: Wilson Sonsini Goodrich & Rosati - Term Sheet Generator. This tool will generate a venture financing term sheet based on your responses to an online questionnaire.
It also has an informational component, with basic tutorials and annotations on financing terms. Term Sheet Series Wrap Up. Series Seed and WSGR Term Sheet Generator: Folks, Don’t Try This At Home. Only a few days later, I’m needing to break my own “Top 10″ rule and add two more valuable resources, making it an even dozen.
For founders who want to get into the nitty-gritty details of venture capital and angel financing documents, there are two online resources from leading Silicon Valley law firms that are well worth your time. Series Seed Financing Documents - SeriesSeed.com. Daniel R. Odio - Hardcore LifeHacker Entrepreneur in Silicon Valley. This is the first of a multi-part blog post I'll be writing over the next week that will chronicle my experience raising a $1MM round for AppMakr.
I'll be sharing my learning and experiences as a first-time fundraiser out here in the Valley. My goal is to provide pragmatic tips to help other entrepreneurs understand the process and short-cut the time fundraising typically takes. Think of it as download that condenses 4 months of learning into a series of blogs you can read in an hour. Be sure to subscribe to the blog if you'd like to get those future posts. Also, we're throwing a party to thank the investors who made this round possible, and celebrating the fact that over 1,000,000 people have now used apps made through AppMakr. Lean Investing by Dave McClure.