Remove class-readers
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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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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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Think ahead when raising your early investments

Berkonomics

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later you may need to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. What VC’s can and cannot do.

Invest 120
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What do you give up when taking outside investors?

Berkonomics

Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first. From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering.

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Does your business need money? Read this!

Berkonomics

Email readers, continue here…] Bootstrapping: This term describes your ability to start a business with little investment and grow it using internally-generated funds. Venture, private equity and more: Here we lump a large number investor classes into one. These include Y-Combinator and TechStars, among others.