Entrepreneurshit. The Blog Post on What It’s Really Like.

It’s 4.50am. Sunday morning. And I couldn’t sleep. I have much on my mind since I just returned from a week on the road. 5 days. 3 cities.

Late night Mexican food. Beers. Airports. Delays.

I left on a Sunday. I had to miss a full day with my family, camping in the mountains. I returned home Friday night at 10pm – too late to see my kids.

I’m reminded of this feeling. It’s all too familiar. It’s what life was like as an entrepreneur. I didn’t sleep much back then. I was on the road much and I internalized much of the stress so that others didn’t have to.

And so it goes again. I’ve been on the road much of 2012 and part of 2011. According to the SEC we’re not allowed to market the fact that we’re fund raising, so I won’t. But for some strange reason they make you file your progress on fund raising, which is the widely picked up by the press. Go figure.

So it is now publicly known that we have closed $150 million in our 4th fund. Ok, well, it’s more than this but I’m not allowed to tell you specifics.  I plan to write about it early next year when we’re all through. We have a little more to go until the finish line. It has been a fascinating experience. But now you know why I’ve had many nights away, many airports and much time on the road.

And why I woke up at 4.50am. But this is nothing like the stress of being an entrepreneur. As I’ve written about before, You’d Have to be a Big Baby to Complain about Being a VC.

What’s it really like being an entrepreneur?

That was the topic of my keynote at Seedcon, an event hosted by the University of Chicago, where I am a  graduate of the MBA program.

I like to speak about this topic with first-time wantrapreneurs because if you read the tech press every day you’d get the impression that it all glamor. It’s not.

You’d imagine that every founder was getting rich. Actually, positive outcomes for founders are quite rare. You probably follow some high-profile entrepreneurs on Instagram and Twitter and see conference pictures of them in Davos, Mexico, Monaco or wherever. You might be psyched out into thinking you’re doing something wrong for being in your shitty little windowless office. Clicking on their glam party pictures. You’re not. You’re where you should be.

There is a difference between a Conference Ho and a successful entrepreneur. But it’s hard to know that from the press. From the Instagram and the Twitter.

As a startup founder you rarely have much money in your bank accounts. Neither in the personal nor business account. That’s stressful enough.

I recently had coffee with a young friend who just finished his first startup. It didn’t end how he would have liked. But he learned. And he’s young. And I’m certain he’ll bounce back.

He told me,

“I have $6,000 in my bank account. Throughout the course of last year I never had more than $8,000 in my account. 

I want to do this again. But I have to be careful. Maybe I need to do slightly later stage.”

He probably didn’t know but he has more in his account than most Americans so there’s that. He had raised nearly $500,000 from investors. Many are well known. He shut down his company gracefully and even thought it must have felt like a crap sandwich doing so I’ll bet his reputation is still solid with his backers.

Think about it – most entrepreneurs who manage to raise seed money or venture capital usually raise enough money for 12-18 months maximum. Many times it’s less. So at any given point you are likely operating with a maximum of 9 month’s cash.

And yet you have to ..

  • Recruit employees in the blind belief that the amazing job they’re quitting to join you will be worth it in the long run
  • Sign up customers who are paying you money for a service you can’t 100% guarantee is going to be operational for the full period that they’re expecting
  • Tell the press how great you are and hope that they aren’t publishing your obituary 9 months later rendering you a fool.
  • Tamp down the enthusiasm your naive family has about your “impending IPO” (honey, when can we buy shares? Uncle Morty wants to know) from “your successful daughter” (we’re so proud of her! she’s so successful! we always knew she would be. she was so precocious in high school. that’s my daughter – did you see her mentioned in the New York Times!) Shit, ma, stop sayin’ that. I don’t want you to have to eat humble pie with your friends next year!
  • Raise money. Need money. More money. Yes, please give me money. No, I don’t really know if I’m going to be able to return it. But without it I know I’m forked. I need it. So I’ll ask anyway and hope like hell I don’t have to avoid you at future cocktail parties. Quick – why don’t entrepreneurs celebrate when they raise money? Because they know that they’ve just signed up for much more obligation.

Early on in my first company I had an employee ask if it was a good time to buy a home. We had less than 6 months’ cash in the bank. I was pretty sure we were going to raise another round of capital. But not sure, sure. I mean you never know if your investors are REALLY going to keep backing you. And you can’t go around telling all of your employees your deepest insecurities about it or you’ll soon have no more of said employees.

Trust you? Yeah, I trust you. But why don’t you just give me the damn term sheet you promised so I can trust you even more.

You have secret doubts about your co-founder. She seems depressed. And she isn’t pulling weekends anymore like you are. I know, right? Total bullshit. She’s just not as committed as she once was. I don’t think she really believes any more. If I told my VCs would they then lose interest in our next round? Would they blame me? Would they back me or think I had gone off the rails?

So Facebook just announced that they’re going to compete with you. Apple announced that they’re shutting down your category. Salesforce.com just bought your main competitor. Your main competitor just raised $75 million and took all of the oxygen out of the room.

Far fetched stuff. If you’re not an entrepreneur. If you’ve been one for a while you know how much you fear every WWDC. Every F8. Or DreamForce. What announcements are going to crush you? [I wrote about what to do when this happens here.]

My biggest fear as an entrepreneur? I was worried that I was going to get married and be on the altar unemployed. “There’s my son. He should have been a doctor like his father!” Truthfully, that’s one of the things that kept me going. I didn’t want to disappoint.

I didn’t want to disappoint my parents. My wife. My employees. The press who trusted me enough to report on our successes.

I didn’t want to disappoint my customers. People seldom understand that when enterprise customers choose your software it isn’t just a purchase order. It’s a human being inside the buying organization who has trusted you. He went to his bosses and asked for budget. He beat down the other factions that wanted to choose your competitor. He has staked his reputation on a project to use the software of some shitty 2-year-old startup company because he believes! In you.

So you ask why on Earth being a founder is stressful?

No, it’s not as bad as working in coal mines. But it is quite the roller coaster and the stress is real.  Some people love roller coasters. Others prefer a smoother ride.

One of the most asked questions I get about being a VC who was formerly  an entrepreneur is if I ever miss being an entrepreneur? Do I ever want to go back to it?

Of course I do! How could you not want to go back to it. It’s addicting. It’s an adrenaline rush like no other.

I often answer this way:

It’s like sports. If you have a chance to be on court and shooting 3-pointers as the game clock is winding down OF COURSE you still want to be on the court. There is no comparable feeling from the sidelines.

Yet one day you wake up and you realize you can’t run as fast as the young guys. You can’t quite hit the 3-pointers as often. Yes, you have maturity that makes you a wiser player. But you realize that you can be more helpful as a coach.

And yes, I sleep better at night as a coach. And I’m happy as a VC.

Remember that if you choose to be an entrepreneur or to at least try – it’s stressful for everybody who does it. Your competitors have just as much angst as you do. You read their press releases and think that it’s all rainbows & lollipops at their offices. It’s not. You’re just reading their press bullshit. They have their secret doubts. And they’re in their offices reading your press releases and wondering why life is much easier for you. And they’re fighting with their co-founders and struggling to ship code on time.

As I like to say, “we’re all naked in the mirror.” We stare at our own imperfections. And then we go out everyday and see everybody else in their fine threads and wonder why it’s much easier for them.

Being an entrepreneur is about finding your inner self confidence.

  • To be constantly told “it won’t work” but to keep plugging away anyways.
  • To be kicked a lot and still keep standing.
  • To hide your demons so that you don’t scare the bejesus out of your employees.
  • To inspire others to join your cause when by all rational accounts they should not.
  • And having the cojones to have them join you anyways. Pottery Barn rule. You hire them, you own them now. As in your responsible for these lines on their future resume. Don’t fuck them up.
  • To swallow your stresses and insecurities and keep your optimistic game face on in the office. And on your home front. Maybe even try to believe it in your own head.
  • It’s about wanting the right speaking slot at an important conference and hounding the organizer until he lets you do it.
  • It’s telling your creditors that you need 60 extra days to pay. Please. Yes, most entrepreneurs will be nodding their heads right now. Not fun, hey? But that’s what it takes.
  • Firing? Hell, get used to it. It’s a necessity. You better be good at it. Develop a thick skin for it. Not put off the difficult fires. You don’t have the spare budget to suffer fools. Hire fast, fire faster.
  • Friday night in the office while others are at the bar. Sundays in the back of a plane. Center seat. Smelly dude next to you.
  • Investor emails. They are forwarding you yet another mother fucking link to an article about your competitors. And wondering why the hell are we not doing THIS like they are. Enough already!?! I told you not to worry about their move into Latin America. I promise you that won’t be a bit market for us. What? No, I’m not worried that they’re higher in the App Store charts than us. They’re paying for traffic. Paying I say! They can’t have a positive LTV on these downloads. You want me to throw around my money like that too, bro?

Hell, I send those emails. I’ll admit it.

Entrepreneurshit. It never ends. It’s not all glamor. It’s mostly not glamorous at all. It’s just something you have to do. Often because you’re unemployable. Your impertinence would get you fired in 2 days for telling your boss he’s a fuck wit. And it’s why you probably will quit on day 366 after the acquisition.

You’re unemployable. You’re an entrepreneur.

It’s not for everybody and you shouldn’t feel bad if you aren’t one of those that chooses this life. You’ll probably be healthier and wealthier. Despite the fact that only the Lotto winners get reported. Many more people play.

But if you do want to go for it, don’t wait. It doesn’t get easier later in life. It gets harder. You’re probably going to fail or have limited success. The math says so. So better that you try as young as you can when failure is easier to bounce back from. When you can wear it as a badge of honor.

I’m not ageist. I’ve backed several entrepreneurs in their forties. No problem. I’m just telling you that if you’ve never done it before and WANT to then the earlier you try, the better. That’s all.

Good luck. Enjoy the ride. I’ll be rooting you on from my far comfier seat on the sidelines. Secretly. Wishing. I were still in the game.

If you want to read more on the topic:

** Images from top were from this week’s travel. The left hand side was dinner, terminal 3, Chicago O’Hare. The right hand side was the view from my two-hour delay at Newark Airport. Nice view, actually.

___________

Reblogged via http://www.bothsidesofthetable.com/2012/11/18/entrepreneurshit-the-blog-post-on-what-its-really-like/

Is there an incubator for aspiring Angel Investors or VCs?

No, but there are several sets of courses on angel investing that can provide a good base from which to start. The most comprehensive and best known is the Power of Angel Investing seminar series developed by the Angel Resource Institute (formerly known as the Angel Capital Education Foundation, and prior to that part of the Angel Capital Association). It was co-funded by the Kauffman Foundation, and primarily written by Bill Payne and John May.

Another course (that is getting a bit long in the tooth now) is Angel Investing as a Team Sport, developed by the National Association of Seed and Venture Funds (now part of SSTI).

A third is the in-house course developed for its members by the Golden Seeds angel network.

For individual angels not affiliated with a group, rumor has it that a definitive introductory book on angel investing is on the way early next year from a major publisher.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

Apply Lessons Learned To Gain From Startup Failure

Crossroads: Success or Failure by StockMonkeys.com, on Flickr

Crossroads: Success or Failure by StockMonkeys.com, on Flickr

Your startup is gone, it’s never coming back, and you are in mourning. An entrepreneur whose business fails grieves similarly to anyone who has lost a loved one. The pain of losing a business is not only about a significant loss of income, but can send your entire identity into turmoil.

Most entrepreneurs define themselves by their business projects. They calibrate self-worth by what they accomplish or do not accomplish. In other words, if a project fails, then they are failures. If a project takes off, then they are wonderful. It’s the universal entrepreneur reaction. Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 28th, 2014

Joining A Startup As CFO Is A Good Path To The Top

Indra Nooyi, CEO and former CFO, PepsiCo, via Wikipedia

Indra Nooyi, CEO and former CFO, PepsiCo, via Wikipedia

Every investor is looking for the “dream team” of executives to put money on. Often I find that experienced investors scan ahead to the management page of a business plan, even before they read the product description. That’s how important the people are. The Chief Financial Officer (CFO) role is usually considered second only to the CEO, because financials are critical.

In fact, about 25% of CFOs make it to the CEO position, although not necessarily in a single step, like Indra Nooyi, PepsiCo’s CEO. The latest Crist Kolder report finds that the percent of female CFOs, as well as CEOs, continues to rise and is at an all-time high. Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 21st, 2014

Who is the most important person in a tech/web startup (visionary, programmer, etc.)?

Since Bill Hewlett joined with Dave Packard in 1939 to create what is today the world’s largest personal computer company, there has arisen an evergreen debate as to who is more important in starting a tech company: the techie or the business guy? Steve Jobs or Steve Wozniak? Bill Gates or Steve Ballmer? Jim Clark or Marc Andreessen?

I propose that it is time to reject the notion of the “business guy” (or “business gal”) entirely. The underlying problem is that there are really three different components here, and like the classic three-legged school, they are all essential for success, albeit with differing relative economic values. What gets things confused is that the components can all reside in one person, or multiple people. And what gets people upset is that there are different quantities of those components available in the economic marketplace, and the law of supply and demand is pretty good about consequently assigning a value to them.

Perhaps surprisingly, the components are NOT the traditional coding/business pieces; nor are they even coding/UI/business/sales, or whatever. Rather, here is the way I see it, from the perspective of a serial entrepreneur turned serial investor, listed in order of decreasing availability:

1) THE CONCEPT
A given business starts with an idea, and while the idea may (and likely will) change over time, it has to be good on some basic level for it to be able to succeed in the long run. How excited am I likely to be when I see a plan for a 2008-model buggy whip? another me-too social network? The 87th investor-entrepreneur matching site with no investors? The base concept has to make some kind of sense given the technical, market and competitive environment, otherwise nothing else matters. BUT good ideas are NOT hard to find. Not at all. There are millions of them out there. The key to making one of them into a home-run success brings us to:

2) EXECUTION SKILLS
It is into this one bucket that ALL of the ‘traditional’ pieces fall. This is where you find the superb Rails coder, AND the world-class information architect, AND the consummate sales guy, AND the persuasive biz dev gal, AND the brilliant CFO. Each of the functions is crucial, and is required to bring the Good Idea to fruition. In our fluid, capitalistic, free-market society, the marketplace is generally very efficient about assigning relative economic value to each of these functional roles, based upon both the direct result of their contribution to the enterprise and their scarcity (or lack thereof) in the job market.

That is why it is not uncommon to see big enterprise sales people making high six figure, or even seven figure, salaries or commissions, while a neophyte coder might be in the low five figure range. Similarly, a crackerjack CTO might be in the mid six figures, but a kid doing inside sales may start at the opposite end of the spectrum. Coding, design, production, sales, finance, operations, marketing, and the like are all execution skills, and without great execution, success will be very hard to come by.

BUT, as noted, each of these skills is available at a price, and given enough money it is clearly possible to assemble an All Star team in each of the above areas to execute any Good Idea. That, however, will not be enough. Why? Because it is missing the last, vital leg of the stool, and the one that ultimately–when success does come–will reap the lion’s share of the benefits:

3) THE ENTREPRENEUR
Entrepreneurship is at the core of starting a company, whether tech-based or otherwise. It is NOT any one of the functional skills above, but rather the combination of vision, passion, leadership, commitment, communication skills, hypomania, fundability, and, above all, willingness to take risks, that brings together all of the forgoing pieces and creates from them an enterprise that fills a value-producing role in our economy. And because it is THIS function which is the scarcest of all, it is THIS function that (adjusting for the cost of capital) ends up with the lion’s share of the money from a successful venture.

It is thus crucial to note that the entrepreneurial function can be combined into the same package as a techie (Bill Gates), a sales guy (Mark Cuban), a UI maven (arguably Steve Jobs), or a financial guy (Mike Bloomberg). And that it is the critical piece that ultimately (if things work out) gets the big bucks.

Who do you think got the biggest relative return from the development of Trump Tower? Architect Der Scutt (the IA)? Engineer Irwin Cantor (the coder)? Broker Louise Sunshine (the sales gal)? EVP George Ross (the biz dev guy)? Or whomever happened to be The Entrepreneur in that deal?

The moral of the story is that for a successful company, we need to bring together all of the above pieces, realize that whatever functional skill set the entrepreneur starts out with can be augmented with the others, and understand that the lion’s share of the rewards will (after adjusting for the cost of capital), go to the entrepreneurial role, as has happened for hundreds of years.

Bottom line?

The most important person in a startup is…The Entrepreneur!

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

Bad Notes on VC

This week. On the phone …

Me: So, you raised venture capital?
Him: Yeah. We raised a seed round. About $1 million.
Me: At what price?
Him: It wasn’t priced. We raised a convertible note.
Me: With a cap?
Him: Yes, $8 million.
Me: Ah. I see. So you did raise with a price. It’s just a maximum price. You’ll find out the minimum when the next round is raised.
Him: Huh?

Last week. At an accelerator …

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Convertible notes have both features in them but for some reason entrepreneurs don’t understand it. It’s like we need a finance 101 course for entrepreneurs
Him: But when I raised my first round we didn’t know how to price the company. There were no metrics. So a convertible note was easier.
Me: Ok. Well. How will you price the next round? Your A round?
Him: On metrics. We’ll have some proof points by then.
Me: Cool. What proof points? How will the lead determine a value? Revenue multiple? EBITDA multiple? Cashflow projections?
Him: Um. I’m not sure.
Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. If we priced it based on any metrics your company would likely be worth less than 7 figures at your A round. Objectively.
Him: But it’s much cheaper to just use the Series Seed term sheets that every law firm has put out so convertible notes make more sense because they’re cheaper and easier.
Me: Then why don’t you take that same Series Seed doc and stick a price in it. That way you don’t have a max or min price but you have a price
Him: But then what if people don’t want to pay that price?
Me: When an investor signs a note with a cap they must assume they are willing to pay the cap or why would they invest? Either that or they’re dumb. Plus, if you price it then when you go to your next round of financing there is no haggling with future investors on what the note should be priced at. The price is simply the price

Last year …

Me: So why did you choose a convertible note?
Him: We didn’t want to price our round
Me: Did you have a cap?
Him: No. Just a discount to the next round
Me: So, who was willing to invest in that? Was it friends and family? I can’t imagine any rational investor would sign up to that.
Him: Yes. Mostly former colleagues and friends.
Me: Ah. I see. So they backed you – a person they trust. A friend. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. How do you think they’ll feel if your next round is at a $50 million post money valuation and their hard-earned $25,000 is worth 0.05% of your company? Less than you’ll probably grant your most junior employees in stock options?
Him: Not so good. Obviously he’d be pissed off. I hadn’t really thought about it.
Me: I know. You and everybody else.

Last year …

Me: So you raised a convertible note? What was the cap?
Him: $12 pre. We raised $2 million.
Me: How are your negotiations with VCs going?
Him: A bit tough. People seem concerned about valuation
Me: Why do you think that is?
Him: They think $14 post is a bit too high
Me: But I thought you told me it was a convertible note? Doesn’t their investment determine the price of the next round? Isn’t $12 pre just a maximum?
Him: Yeah. But people seem pretty focused on that number. Raising lower seems kind of like something is wrong. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round
Me: More dilution? A down round? I thought it was a convertible note with a cap? Didn’t you consider that raising at $8 million was a possibility?
Him: Um. We never thought about it.
Me. Huh.

Tonight. At dinner …

My colleague: We have a bit of a problem. They raised multiple seed rounds and each at different prices with convertible notes. They raised $2 million but when you add up all of the liquidation preferences if they convert at our proposed share price the total liquidation preferences would equal more than $7 million
Me: Yup. I see that all the time. I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies.
My colleague: Whoa.
Me: Yup. The whole industry has strangely accepted this artificial structure for all the wrong reasons. There are a million ways to do quick, easy, low-cost rounds with prices. There are a bunch of ways to offer cheaper pricing to people who commit early without notes. But founders these days seem strangely unfocused on finance and on terms that could hurt them even though we fought to the death about these same terms 10 years ago

The scoop.

These are all real conversations. I have them all the time. I’m bored of it. 99.9% of the time I have no vested interest in having the debate. I’m just trying to be helpful because in this case more than any I truly understand the structure from both sides of the table. People keep taking the sucker’s bet and I can’t talk them out of it.

Here’s some more details on Convertible Notes if you’re interested.

I have never come across a sophisticated A, B or C round venture capitalist who thinks convertible notes are a smart move for entrepreneur or investor. They only people I have heard promoting them tend to be super early stage investors or accelerators and often when I talk to them about the structure they’ve never given much thought beyond “they’re easier,” “they’re cheaper” or “it’s faster to raise this way” none of which is actually true.

I’ve heard: “Well it’s great because you don’t have to agree terms with your investors. You can negotiate that later!’

But do you want to start a relationship with your most important supplier – that of capital to fuel your business – by avoiding talking about his or her expectations in terms of rights or privileges? What if when you have that conversation you don’t agree? It’s like punting on discussing with your future husband or wife what religion you’re going to raise the kids. If it’s important to you wouldn’t you discuss it up front?

“But how do I offer cheaper prices to early investors?” Simple. If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. And so forth.

“But lawyers will charge much more for equity.” Not in my experience. Lawyers don’t make money on your seed round in any instance. They are investing in your relationship in hopes that you do an A, B and C round. A few M&A transactions. IP. Employment. Stock Option plans. Maybe an IPO – who knows?

Well … the reason I want to do notes is so I can do multiple closings. Try doing THAT with equity. Um, ok. How about you close your first capital (say $500,000) and put in the docs that you have up to [90] days to raise an additional $1 million at the same price at your discretion.

Boom.

I actually use this method on at least 50% of the deals I close. I often will fund 80+% of a round and move quickly. I give the entrepreneurs usually 30-60 days afterwards to top-up a round with other helpful angels or seed funds that we mutually agree. That way neither of us have to wait for stragglers and the entrepreneur can be picky about whom they let in because they don’t feel pressured to get answers quickly.

[Update: From Twitter a commenter says, “One of the advantages of notes is that you don’t have to have a lead.” – and other lies first-time founders tell themselves. No lead equals nobody owns responsibility for you if things aren’t going well. You WANT a lead. Could be a VC seed lead, a VC lead an angel lead. But in life investors are looking for somebody inside the tent to tell them what to do if you need more money. It’s like the Pottery Barn rule, ‘If you break it you fix it’ as in … If I’m the lead and I help round up other investors and things hit a pothole everybody knows I own helping the founder through it. This is why Party Rounds in VC suck.”

Ok. Truthfully. I don’t have some big dog in this fight. I really just want to champion Finance 101 to entrepreneurs. I just simply want to help you to avoid signing a silly deal if I can get through to you.

But wait. Is there ever a situation where a convertible note is a good idea?

Yes! Thanks for asking.

Convertible notes were previously used primarily for “inside rounds” in which the existing investors provide you with bridge financing to get to the next round.

Why don’t they set a valuation then?

Well. For starters – you and they both don’t necessarily want to set a price because you’re hoping a future investor will pay a higher price for the next round given progress has been made. If you set a price now then that will be used as a benchmark for the next investor to justify a lower price.

But why would my investor do that? Isn’t it like you said about angels? They are paying now to increase price and they will convert later at a higher price? Isn’t that conflicting advice?

Well. Actually not. Because they are existing investors. Here’s a couple of reasons why.

1. They already locked in stock at a lower price. So if the next round is higher they have a much lower cost of ownership than the next investors anyways

2. They would likely have had to participate prorata or some portion of it in the next round financing anyways and at the price that the next round investor chooses. So it’s less of a big deal if you’re an insider

3. The higher their next round the more they can “mark up” their initial investment which is usually a multiple higher than the bridge so if they achieve a higher price later it’s win-win for them.

4. Often since they’re insiders they don’t have a choice other than to shut the company down or to use the fact that you’re out of money as leverage against you. That does happen. But most VCs prefer not to do that as it’s self defeating.

I hope these notes helped a bit. Even though I know most of you will succumb to the industry pressure and just do convertible notes anyways :)

 

___________

Reblogged via  http://www.bothsidesofthetable.com/2014/09/17/bad-notes-on-venture-capital/

Great Startups Are Where Soul and Technology Meet

MIT Chapel, Cambridge Mass via Wikipedia

MIT Chapel, Cambridge Mass via Wikipedia

Some entrepreneurs forget that they can’t use people the same way they use technology to build a startup. Inventors, for example, are skilled in manipulating technology, but may have little interest or experience engaging people to make an effective team. Unfortunately, startups are not one-man shows, so entrepreneurs need to study leadership as much as they study technology.

In fact, we can all benefit from focusing on the keys to people leadership from time to time. A while back I came across the new edition of “Leading Out Loud: A Guide for Engaging Others in Creating the Future,” by Terry Pearce, who has been is this space for a long time, and I felt it spoke loudly to every entrepreneur looking to improve his leadership communication. Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 14th, 2014