TAG: Crisis
Question: How to Re Align a Stick Up?
TheFunded.com Discussion
Posted by Anonymous on 2009-10-29
Tags: Funding Sources Crisis Stick Up
Urgent: Should I Trust This Investor and Take His Offer
TheFunded.com Discussion
Posted by Anonymous on 2009-10-05
Tags: Funding Sources Crisis Advice Investor
Help Needed for Request of Retroactive Term Changes by Angel Investor
TheFunded.com Discussion
Posted by Anonymous on 2009-09-18
Tags: Funding Sources Crisis Angels Term Changes
Dilemma in Fund Raising Planning
TheFunded.com Discussion
Posted by Anonymous on 2009-09-11
Tags: Funding Sources Crisis Introductions Pitching Fund Raising
Winding Down
TheFunded.com Discussion
Posted by Anonymous on 2009-09-03
Tags: Operations Crisis Wind Down
Bankruptcy Lawyer / Consultant Needed in Silicon Valley
TheFunded.com Discussion
Posted by Anonymous on 2009-09-02
Tags: Operations Crisis Wind Down Bankruptcy
Best Way to Deal with an Embezzling Co Founder Case
TheFunded.com Discussion
Posted by Anonymous on 2009-06-27
Tags: Operations Crisis Co-founders Embezzling
CEOs Being Removed
TheFunded.com Discussion
Posted by Anonymous on 2009-06-26
Tags: Operations Crisis Incompetence
Is Hibernation a Real Option?
TheFunded.com Discussion
Posted by Anonymous on 2009-06-17
Tags: Funding Sources Crisis
A Dark View of Future of Venture Capital Market
TheFunded.com Discussion
Posted by Anonymous on 2009-06-04
Tags: Venture Business Crisis
Has Funding Begun to Return?
TheFunded.com Discussion
Posted by Anonymous on 2009-06-02
Tags: Venture Business Crisis
The Collapse of the VC Ecosystem & What It Will Look Like Post Recovery
TheFunded.com Advice
Posted by fnazeeri on 2009-03-08
Tags: Venture Business Crisis
I wrote this post on how the VC market is imploding which is not news to anyone on TheFunded, but I tried to take it a step further and talk about what it will look like post recovery. I read a great post on Seth Godin's blog about how everyone talks about the "crisis in our face" but not the "crisis in the distance." Anyway, here's a crack...let me know what you think.
PRIVATE: Members OnlyThe VC Apocalypse: Careful with Your Time
TheFunded.com Advice
Posted by Doe on 2009-03-08
Tags: Pitching Economy Crisis
Fellow entrepreneurs, most VCs are unable to complete capital calls and, therefore, are unable to make new investments. This includes everyone from name brand funds to small funds, and it does not matter if they recently closed a new fund or not. If you are pitching a venture fund, there are two critical pieces of information that you need to know before wasting time with meetings, diligence, and faux terms:
- First, has the fund made an investment in a company that was not already in the portfolio in 2009, and, if so, which company?
- Second, has the fund completed a successful capital call in 2009?
Is the answer is 'no' to either of these questions or the fund is uncomfortable discussing these matters, then don't bother pitching them and move on. Why? Between the dismal exit history, defecting LPs, worthless secondary markets, and massive position devaluations, venture firms are facing an apocalypse right now. The whole concept of 'venture capital' as an asset class is being re-evaluated by accountants worldwide, and the outcome of that work does not look good for venture capitalists.
PRIVATE: Members OnlyThe Obama Administration Has It All Wrong
TheFunded.com Discussion
Posted by Anonymous on 2009-03-06
Tags: Venture Business Economy Crisis
Just Say No to a VC Bailout
TheFunded.com Discussion
Posted by Anonymous on 2009-02-25
Tags: Venture Business Crisis Economy
Nyt's Friedman on Start Ups
TheFunded.com Discussion
Posted by Anonymous on 2009-02-22
Tags: Venture Business Economy Crisis
Has the Thinning of the Herd Begun?
TheFunded.com Discussion
Posted by Anonymous on 2009-02-20
Tags: Venture Business Crisis
Is There More or Less Money Around
TheFunded.com Discussion
Posted by Anonymous on 2009-02-15
Tags: Funding Sources Crisis
K Waves, an Interesting Perspective on Where We are at with the Current Crisis
TheFunded.com Discussion
Posted by Anonymous on 2009-02-09
Tags: Venture Business Crisis Economy
Economic Stimulus
TheFunded.com Discussion
Posted by Anonymous on 2009-02-07
Tags: Venture Business Economy Crisis
Atlas Ventures Crash & Burns
TheFunded.com Discussion
Posted by Anonymous on 2009-02-03
Tags: Venture Business Crisis
Warning: "Inside" Rounds
TheFunded.com Advice
Posted by Anonymous on 2009-01-25
Tags: Funding Sources Strategy Valuation Crisis
As it is becoming harder to raise capital from venture capitalists, existing investors are facing situations where they need to lead new rounds in their own portfolio companies. This presents a big problem for valuations, especially if an investor only has convertible debt. Recently, I've heard a few stories about existing investors promising to lead a round, then pulling out or dramatically changing the terms. Worse, investors will sometimes string you along with a singed term sheet until you are out of cash, and then completely change the deal to take control.
Here are some tips if you think that you are going to need money in the next 18 months.
Know where insiders stand: You need to know where if your insiders will participate or lead a new financing event, and you should also ask them what their specific expectations are for your company performance. Assume that any inside round will be flat.
Pursue other options: Even if your insiders agree to lead a round, you should do your best to have an alternative financing option available. You will never get a fair price for your equity from insiders, since they are pricing, selling, and buying the equity at the same time and since they see all the warts and bruises.
Raise now, not later: Don't wait to raise money. Raising will take twice as long and will be twice as hard in this market. Try to raise enough capital to operate for more than 48 months, if you can.
When in doubt, do debt: If things are not moving fast enough and you have only three or four months worth of cash left, press your existing investors to do a convertible debt round that will give you eight to twelve months of low growth operating capital.
Insider sheet to attract outsiders: If everything else is failing, you may want to have your insiders draft a term sheet with a lot of room for new investors to participate. It's often easier to find outside investors with a "legitimate" term sheet in hand.
Good luck!
PRIVATE: Members OnlyRadically Reinventing Venture Capital
TheFunded.com Discussion
Posted by Anonymous on 2009-01-23
Tags: Venture Business Strategy Crisis
"Home Run" Insanity, but There are Perks
TheFunded.com Advice
Posted by Jon on 2009-01-20
Tags: Venture Business Crisis Economy
According to VentureWire, the number of venture investments in Q4 2008 fell to the lowest level since after the last crash, and the amount of money invested into the whole private equity sector halved from the same quarter last year. Many of the private equity investments being made are in "secondary funds," which buy distressed portfolio positions, so the story for the relatively small segment of venture capital is probably much worse.
The reality on the street for entrepreneurs raising money is brutal. Funds take meetings, but it's clear that they are not really making investments. With limited cash in the bank and limited prospects for raising more capital, it seems that all the good VCs are waiting for a "home run" opportunity to walk in the door and give them a 50% valuation haircut.
There is a silver lining. Deals perceived as being a "home run" have leverage. We just closed a later stage round after nearly a year of fundraising and pulled out over $1 MM for the founders, selling some of our equity. While our valuation was lower than we would like and the terms had some other unwanted teeth, when we threatened to walk, the deal was sweetened. Our traffic numbers are strong, so we had a few VCs coming to us with offers over the last couple months
From what I can gather, the VCs needs to justify making an investment in the current recession, so they have to issue less favorable terms. They can't explain the deal to their partners or investors otherwise. My advice would be to get as much exposure and traction as possible, have a few funds come to you, then target the best investor and negotiate the secondary perks more than the primary terms. Good luck!
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