1/8 Yesterday I tweeted about a story of founders who had given up too much equity too early which may impact their future funding. Today I want to talk about how this can happen when taking on a lot of Note agreements.

#vc #startups #founders #founders
2/8 It's common for startup founders to use SAFE or KISS or Convertible Notes for their earliest funding. it is also more and more common for founders to do multiple rounds of note agreements

#vc #startups #founders #founders
3/8 A secret here is Notes don't have to be a part of a round as each note is its own agreement, so technically each note could have different terms or different cap. This can lead to a lot of flexibility that's both good and bad

#vc #startups #founders #founders
4/8 Something founders sometimes mismanage is setting a fair valuation cap, but then taking on multiple notes over 12-18 months or longer without raising their cap or not raising it enough

#vc #startups #founders #founders
5/8 This can easily lead to a situation where the founders have given up way more equity than they thought or had planned to.

#vc #startups #founders #founders
6/8 This is a result of founders not always understanding or calculating their ownership relative to their investors and their many notes. that 50K check here, 25K check there, and equity to an accelerator starts to add up quick

#vc #startups #founders #founders
7/8 The way you avoid this is by constantly doing scenario planning for future rounds of funding. When you close a note calculate the value of your investors' ownership if you raise money at a low, mid, or high future valuation

#vc #startups #founders #founders
8/8 This allows a founder to monitor how much equity they have really given up to date and gives a sanity check around when they need to start thinking about raising their cap or saying no to new investments

#vc #startups #founders #founders

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More from @MacConwell

15 Oct
1/9 I spoke to some founders yesterday building an amazing company with some good revenue and has raised some significant capital early on. The only problem is their early investors hit them with some crazy terms and valuation.

#VC #Founders #Funding #Startups
2/9 Now the founders combined own less than 50% of the company pre-series B. That's terrible, and heartbreaking considering these were underrepresented founders.

#VC #Founders #Funding #Startups
3/9 You may be wondering why is this terrible when VC's take equity from founders and are sharks anyway. Yes and No. Yes, VC's take equity but not that much and not that early. The fact that each founder owns so little will actually hurt them.

#VC #Founders #Funding #Startups
Read 9 tweets
26 Aug
Story/Tread - 1/

Startups fail for all sorts of reasons and some are avoidable. This is a story about an amazing company I loved and went so hard for and failed because the founders were scared to ask for help

#vc #funding #startups #founders
2/ I'd like you to meet the amazing company of Javazen. They made a coffee and green tea blend that would give you the kick you needed without the crash.

#vc #funding #startups #founders
3/ When I met them they were a team of three from the University of Maryland and were crushing it. Their coffee was already being sold in Wholefood, Wegmans, and Trader Joe.

#vc #funding #startups #founders
Read 12 tweets
7 Aug
1/15 Here are common mistakes made on each slide I look for in a deck.

-Intro
-Problem
-Solution
-Market Size
-Business Model
-Traction
-Pipeline
-3-5 Year Projections
-Go-to-Market Strategy
-Competition
-Team
-Ask
-Closing

#vc #startup #funding #pitch
2/15 On the Intro slide please don't forget your contact information.

#vc #startup #funding #pitch
3/15 When you get to the Problem slide, don't just give a bunch of stats. Help explain why those stats matter and why what your pitching is a truly impactful problem.

#vc #startup #funding #pitch
Read 15 tweets
3 Aug
1/15 Talking about decks yesterday I figured it was worth putting down what I look for in a deck

-Intro
-Problem
-Solution
-Market Size
-Business Model
-Traction
-Pipeline
-3-5 Year Projections
-Go-to-Market Strategy
-Competition
-Team
-Ask
-Closing

#vc #startup #funding #pitch
2/15 The Intro slide is just a simple slide with the company name or logo, the CEO's name, and some contact information

#vc #startup #funding #founders #pitch
3/15 The Problem slide is your chance to humanize the problem you are solving. I like a story using a real-world example to make the problem real and human and draw in the investors. remember the art of pitching is the art of storytelling.

#vc #startup #funding #founders #pitch
Read 15 tweets
29 Jul
1/8 Founders, I know you are all really focused on pitching and your pitch decks but please know it is 1/2 if not only 1/3 of the battle.

The next big stage you should be ready for is Due Diligence (DD). This where many investments go to die

#vc #founders #funding #startups
2/8 Due Diligence is when investors take the time to basically make sure everything you've told them in the pitch is real. As founders, you have to have some level of delusional confidence. DD is where we get to see how delusional it is

#vc #founders #funding #startups
3/8 During DD some investors look into more things than others. Many investors will have a list of documents and references they need from you. Many founders set up a data room which is a cloud folder with most of these documents ready to go

#vc #founders #funding #startups
Read 8 tweets
26 Jul
Thread 1/

I asked the question 2 days ago "What is Venture Capital to you"

A majority of the responses were predictably about Venture Capitalist with quite a bit of negativity

But let's talk about what Venture Capital actually is.

#vc #startup #funding #founders
2/

Venture Capital is an alternative asset class. Actually, it is the subset of the alternative asset class of Privet Equity

#vc #startup #funding #founders
3/

An Asset- is something containing economic value and/or future benefit.

An Asset Class- is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations

#vc #startup #funding #founders
Read 9 tweets

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