Thoughts on startups by investors that
fund them & entrepreneurs that run them

Blog Archives

Should a startup set aside equity?

The first thing you should do is talk to a lawyer who is familiar with setting up startups, rather than trying to handle things yourself. This need not be expensive; at the very high end from a top tier firm, you’re probably talking no more than $5,000, for which you’d get absolutely everything a startup needs.

Typically, since only you

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What is the most viable model for equity based crowdfunding?

One of the following two:

Revenue-backed, interest-bearing notes with a kicker multiple The funds go into the company as a loan, and get repaid with interest by distributing a fixed percentage of gross revenues (say, 5%) among all the note holders. Once the base+interest has been returned to the investors, the company continues to pay out a percentage of revenues

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Are convertible notes typically issued along with stock in Series A?

No, because they are, by definition, two completely different things.

“Series A” is a shorthand way of referring to what is typically the first institutional round of investment in a company, made in the form of purchasing Convertible Preferred Stock. A “Convertible Note” is a loan to the company, in which the principal (and often the interest earned to date)

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The Take It or Leave It Choice

The market for startup financing is a very lopsided one. For every VC pitch meeting that results in an investment, there are 399 others that typically conclude with the dreaded words, “Thanks for coming in, we’ll get back to you if we’re interested.” Given those odds, delivering a successful pitch means that virtually everything needs to come together in perfect

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Should VCs and Angels take race and gender into consideration?

Absolutely…in a positive sense [doh!], in order to help proactively ensure that (a) not only white males become entrepreneurs in the first place, and (b) that as investors they are not inadvertently restricting their universe of potential investees.

That’s why in the past few months I have gone out of my way to participate in the Black Founders Ideas Are Worthless conference (http://www.blackfoundersconferen…), the Latinos

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The Democratization of High Returns

Today, more than one third of the United States population falls into a financial demographic known as the “mass affluent”. Unlike the headline-grabbing ultra-rich, the mass affluent are people with assets between $100,000 and $1 million, or annual incomes over $75,000. Historically, the 33 million American households in this category have invested for their future in one of three ways:

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7 Startup High Risk Factors That Scare Investors

We all know that every startup is risky. No risk means no reward. Yet every investor has his own “rules of thumb” on what makes a specific startup too high a risk for his investment taste. You need to know these guidelines to set your expectations on funding.

Of course, if you intend to fund the business yourself, or have

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2011 Halo Report :: US Angel Group Activity

At the Angel Capital Association (ACA) Summit in Austin in March, the Angel Resource Institute reported on angel group activity in 2001 in the first annual Halo Report.  I found some of the results quite interesting.  For example:

The median round of investment by group was about $700,000 but less than $300,000 was invested by the local group leading the

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