Crowdfunding Law Will Turn the Start-Up World Upside Down - Tim Rowe - Voices. Remember that special moment when we all realized that the Web was going to remake yard sales and auctions, but we didn’t know yet who was going to win? (And then eBay left the rest in the dust?) Such a moment has come again, and with a choice prize: Investing in start-ups. The House has already passed crowdfunding legislation, by a whopping majority. The president supports it. Senators on both sides of the aisle (Merkley, Bennet, and Brown) have agreed on a version. What would this mean? Everybody likes the innovation and jobs that this could propel. Here’s how this is going to play out: Intermediaries (the future eBays of this space) will spring forward to handle the paperwork, do background checks on issuers (required), ensure that offerings are well described and enforce balanced investment terms. This could be big. Up next? The only wrong answer is 50/50: Calculating the co-founder equity split.
Guest Commentary: The question of equity brings out the most fundamental differences, perceptions, and values in an aspiring startup. In fact the equity question, more than any other, may strangle a young company before it can even get started. And that’s a damn good thing. But before we get in to that… Who’s a founder? As straightforward as this question sounds, it’s a tricky matter.
There are, quite roughly, three stages in every company’s life: 1. 2. 3. The rule is this: if you’re working for a company that’s so young it can’t pay you, you’re a founder. What’s a founder worth? A founder is defined by the inability of their company to pay them (or anyone else) for anything. 1) Their contribution 2) The market The first of these is fair.
And now, the formula Of course, there can be no right answer – but this one’s not so terribly wrong. But others come from one leader who recruits the others. Ideas are precious, but dwarfed by execution (5%) The first step is the hardest (5%-25%) How to Create Your Own Real-World MBA – II. Brainstorming in Boulder, CO with a class of founders from TechStars, where I’ve been a mentor. After this particular trip, I ended up advising Graphic.ly. (Photo: Andrew Hyde) Disclaimer: nothing on this site is legal advice, and I am not an investing expert. This post is continued from Part I. Part I explained how, instead of getting an MBA, I invested the tuition dollars into angel investing. To recap, my current stats for the two-year “Tim Ferriss Fund” look like this: 15 or so total investments 0 deaths 2 successful “exits”, or sales (including my own company) If we look at the value of my remaining start-ups on paper, based on subsequent funding and valuations, the portfolio is probably up well over 4x.
This post will look at how I’ve found deals, how I filter deals, and the rules I’ve set for myself. Before we get started: you almost always need to be an “accredited investor” to angel invest. Before we get started – part deux: angel investing can be complicated. Investors vs. 1. A. Job interviewing 101 -- 6 essential questions to ask every candidate. Interviewing for a job can be tough. Especially in a tight economy, the experience might fall somewhere on the stress scale nestled between a root canal and an IRS audit. However, being on the other side and conducting interviews isn't easy. Choosing the right person is a great investment not only for your company but for your own career. On the other hand, hiring a lemon will make your CEO think that you might also be one. You have a short amount of time to gather important information from this person, so you want to make each question count. Here are six to ask every single candidate you interview: What's important for you in a job?
Much of a job interviewis about you vetting the candidate -- they've already shown their interest in you by applying for the position. 4 things a manager should never say4 things never to share with HR5 things you should never say in a job interview How do you handle working with a difficult colleague? How will you add value within 30-60-90 days? The Wisest Entrepreneurs Know How to Preserve Equity. Harry Campbell So you want to be an Internet billionaire.
It’s not just about having a great idea and building a world-class business at light speed. A review of recent initial public offering filings for Internet start-ups shows that the founders of Groupon and Zynga — and by other indications, Facebook, which has yet to file — have had to do more. These entrepreneurs avoided selling their precious equity early, before reaching the I.P.O. milestone. These entrepreneurs appear more savvy than earlier Internet moguls, but their success owes thanks in large part to an old guard in Silicon Valley that is eagerly advising the new generation on the pitfalls. Success can spell the difference in billions. Andrew Mason, the chief executive and founder of Groupon, is worth $2 billion less than Eric Lefkofsky, the man who financed Groupon’s start. The multibillion-dollar difference is a result of a start-up’s need for capital at the embryonic stage. In Groupon’s case, Mr. What is the lesson here?
Take the Money and Run: An Insider’s Guide to Venture Capital. [Editor's note: Gerry Langeler of OVP Venture Partners shares an excerpt from his new book "Take the Money and Run: An Insider's Guide to Venture Capital. "] How to Avoid a “No” from a VC: People The old saying in the VC business is investors invest in three things: people, people and people. There’s more than a little truth to that. We’ve seen great teams dig themselves out of some deep holes, and weak teams dig themselves into the ground. But how do you know you have a great team, at least in the eye of the beholder (us)? First, ask yourself this question: “What is the probability that there is a team with more domain expertise, more horsepower, and more high-level industry connections located somewhere along the Silicon Valley, Seattle, Austin, Boston, London, Zurich, Haifa, Mumbai, Shenzhen, Tokyo, Seoul corridor?”
We know all too well that in this global, internet-savvy world, unique ideas are fleeting. Gerry Langeler So, know where you are weak or missing talent. Dilution and Ownership. Understanding How Dilution Affects You at a Startup. This post originally appeared on TechCrunch. Dilution. Or as industry insiders call it, “taking a haircut.” Everybody knows that when you raise money at a startup your ownership percentage of the company goes down. The goal is to have the value of the startup go up by enough that you own a smaller percentage of a much larger business and therefore your total personal value goes up. The simplest way to think about this is: If you own 20% of a $2 million company your stake is worth $400,000. But understanding how you’re likely to get diluted over time is a more difficult concept.
I’ve had to simplify a bit, but to make it easier to understand I’ve teamed up with Jess Bachman at Visual.ly. And Jess is awesome at his trade. So here is our crack at explaining the world of dilution to you. Listen, understanding the world of valuations and how equity gets split on a sale is a whole lot more complicated than the graphic depicts.