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Your board should protect you!

Berkonomics

They can elect directors for their class of stock, approve mergers and acquisitions; approve increases or changes to the capital structure of the company and other more minor actions. Sometimes, there will be a conflict of interest between the people representing the various shareholder classes on a board.

Class 282
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How do you pay an early-stage board?

Berkonomics

You do not pay professional investors who are serving on behalf of an investment company or VC and paid by that company. If you have only one class of stock, the price is the same as the last investment price per share if no 409a appraisal. VC board members sometimes request this, other times do not.

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VC investors: Don’t be greedy even if you can.

Berkonomics

Promissory notes come before any equity, and most late equity investments come before early equity investments, even of the same class of security. Conversely, I have praised and seen others praise VCs who volunteer to eliminate participation clauses even before knowing the ultimate sales price in a deal.

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What do you give up when you take outside investors?

Berkonomics

Setting your expectations Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first. There is no middle ground. Resetting your priorities Taking money from these sources involves resetting priorities over time. The newest investor has the power.

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Need money? Read this!

Berkonomics

But few businesses grow into the sweet spot of $20 million to $30 million in worth to an ultimate buyer without the injection of outside capital. Friends, family and fools: [Email readers, continue here…] This term, although pejorative, describes the typical mix of early investors in a small, young growing business.

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This Week in Venture Capital – Episode 3

Both Sides of the Table

Leverage: with teachers not having to have in-person classes you can build a more cost-effective model and teaching can be targeted more to your individual needs. Investors: FirstMark Capital (Amish Jani)(lead), with existing investors: Accel Partners, Bessemer Venture Partners, First Round Capital, Reid Hoffman.

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Outbound VC Dialing Programs – Total Disrespect for Entrepreneurs

Both Sides of the Table

I recently got an email from a friend who had been approached by a well known VC. He sent me an email asking whether the approach was real and whether he should take it seriously. Here is the email he received (reprinted without names with his permission). Why do VCs send generic outbound emails like this?