Comments on: NextWeb – How to deal with VCs http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/ Tracking European web and mobile start-ups Tue, 24 Nov 2009 17:06:17 +0100 hourly 1 By: Siim http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-164865 Siim Thu, 09 Oct 2008 06:42:18 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-164865 Would you say that the same principles still apply in current economic situation as well, or the principles have somewhat changed? Would you say that the same principles still apply in current economic situation as well, or the principles have somewhat changed?

]]> By: Adeo http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125879 Adeo Thu, 03 Apr 2008 18:15:43 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125879 The slides from the presentation have been posted now: http://www.thefunded.com/funds/item/3208 The slides from the presentation have been posted now:

http://www.thefunded.com/funds/item/3208

]]> By: JMO http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125874 JMO Thu, 03 Apr 2008 18:11:13 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125874 "or by checking publicly available filings which might allow you to verify this." www.pedatacenter.com Danvers, thank you for mentioning this. People seem to forget that we have built a database of venture regulatory filings, already analyzed, so that they can have the ammo to back up their term sheets and validate whether or not something is (or isn't) industry standar “or by checking publicly available filings which might allow you to verify this.”

http://www.pedatacenter.com

Danvers, thank you for mentioning this. People seem to forget that we have built a database of venture regulatory filings, already analyzed, so that they can have the ammo to back up their term sheets and validate whether or not something is (or isn’t) industry standar

]]> By: Dotcom Entrepreneur http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125835 Dotcom Entrepreneur Thu, 03 Apr 2008 16:11:15 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125835 Adeo, this is an eye-opening post that is very timely for me. I have a telephone meeting with a VC tomorrow. He said he would prefer to have a first conversation on the phone, even though I told him that said I will be in his area that day anyway. I am planning to call him today and respectfully decline that phone meeting, for two reasons: - I truly believe that my story is best told face to face. - He is the ONLY VC on my list! I fully agree with your post I need to expand my VC list to 10+ Any comments or suggestions? Adeo, this is an eye-opening post that is very timely for me.

I have a telephone meeting with a VC tomorrow. He said he would prefer to have a first conversation on the phone, even though I told him that said I will be in his area that day anyway.

I am planning to call him today and respectfully decline that phone meeting, for two reasons:

- I truly believe that my story is best told face to face.
- He is the ONLY VC on my list! I fully agree with your post I need to expand my VC list to 10+

Any comments or suggestions?

]]> By: Shawn http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125832 Shawn Thu, 03 Apr 2008 16:07:25 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125832 "Most venture exits walk away with over 80% of the value generated, even though it often appears like 25% on paper." Can you explain what you mean by that? Both "exits walk away" (is that the investor gets 80% back?) and what is "value generated"? Thanks! “Most venture exits walk away with over 80% of the value generated, even though it often appears like 25% on paper.”

Can you explain what you mean by that? Both “exits walk away” (is that
the investor gets 80% back?) and what is “value generated”?

Thanks!

]]> By: Danvers Baillieu http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125768 Danvers Baillieu Thu, 03 Apr 2008 13:29:24 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125768 Adeo - I agree completely with you about the use of the phrase "industry standard" - it is usually relied on when there is no other possible justification for the term being in the term sheet. However, it often comes down to strength of bargaining position in the end. If VCs claim they "always get" a particular term, it is definitely worthwhile doing some research - either by speaking to any other companies they have invested in (if you know them) or by checking publicly available filings which might allow you to verify this. It is amazing how easy it is to catch someone out on this. Adeo – I agree completely with you about the use of the phrase “industry standard” – it is usually relied on when there is no other possible justification for the term being in the term sheet. However, it often comes down to strength of bargaining position in the end.

If VCs claim they “always get” a particular term, it is definitely worthwhile doing some research – either by speaking to any other companies they have invested in (if you know them) or by checking publicly available filings which might allow you to verify this. It is amazing how easy it is to catch someone out on this.

]]> By: Adeo http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125758 Adeo Thu, 03 Apr 2008 13:07:00 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125758 Thanks for the great feedback on the talk! Always a pleasure to help start-ups on your birthday and get a positive reaction. @Danvers: To clarify the “lawyer” point in the article, I am a firm believer in the strategy of “trust, but verify” when it comes to term sheet negotiations by counsel on your behalf. Entrepreneurs the world over should not assume that something in your legal documents is an “industry standard” just because that is the opinion of your counsel. Do your own research. For example, TheFunded.com publishes term sheets from all around the world (available to Members), and there is nothing standard about the deals being offered in any respective industry, region, or stage. Terms are all over the map, and everything should be properly understood and negotiated by the entrepreneur before executing the documents. Thanks for the great feedback on the talk! Always a pleasure to help start-ups on your birthday and get a positive reaction.

@Danvers:

To clarify the “lawyer” point in the article, I am a firm believer in the strategy of “trust, but verify” when it comes to term sheet negotiations by counsel on your behalf. Entrepreneurs the world over should not assume that something in your legal documents is an “industry standard” just because that is the opinion of your counsel. Do your own research.

For example, TheFunded.com publishes term sheets from all around the world (available to Members), and there is nothing standard about the deals being offered in any respective industry, region, or stage. Terms are all over the map, and everything should be properly understood and negotiated by the entrepreneur before executing the documents.

]]> By: Yakov http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125714 Yakov Thu, 03 Apr 2008 11:22:33 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125714 Great advice! shall use it! Great advice! shall use it!

]]> By: Danvers Baillieu http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125683 Danvers Baillieu Thu, 03 Apr 2008 10:15:45 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125683 Wow - I know people can be cynical about lawyers but that comment about the Company's lawyers only being interested in the deal closing so that they get paid by the VC made me drop my dictaphone.... On the one hand lawyers are criticised for putting up too many roadblocks and not being commercial enough, and now on the other, not giving straight advice so that the deal goes ahead despite the interests of the Company. I for one, have been happy to tell clients that a VC is asking too much and they should walk away (despite the impact on potential fee revenue) - much better to live to fight another day than do the wrong deal. Equally, clients can be unrealistic as to what must be surrendered and sometimes it is up to the lawyer to give the client a reality check to prevent unreasonable positions screwing up the whole deal.... The rest of the advice is pretty sound though. Wow – I know people can be cynical about lawyers but that comment about the Company’s lawyers only being interested in the deal closing so that they get paid by the VC made me drop my dictaphone…. On the one hand lawyers are criticised for putting up too many roadblocks and not being commercial enough, and now on the other, not giving straight advice so that the deal goes ahead despite the interests of the Company. I for one, have been happy to tell clients that a VC is asking too much and they should walk away (despite the impact on potential fee revenue) – much better to live to fight another day than do the wrong deal. Equally, clients can be unrealistic as to what must be surrendered and sometimes it is up to the lawyer to give the client a reality check to prevent unreasonable positions screwing up the whole deal….

The rest of the advice is pretty sound though.

]]> By: luca http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125659 luca Thu, 03 Apr 2008 09:28:35 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125659 I would add: if they ask you how to prevent other companies to do the same you are doing, tell them that EVERYONE can do the same, you cannot do anything to prevent it, but you just do it better. I would add: if they ask you how to prevent other companies to do the same you are doing, tell them that EVERYONE can do the same, you cannot do anything to prevent it, but you just do it better.

]]> By: Joe Drumgoole http://eu.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/comment-page-1/#comment-125650 Joe Drumgoole Thu, 03 Apr 2008 09:11:56 +0000 http://uk.techcrunch.com/2008/04/03/nextweb-how-to-deal-with-vcs/#comment-125650 Brian Caulfield (a VC here in Dublin) talks about focussing on the cash waterfall, that is, what happens at exit in a trade sale. Founders often obsess about hanging onto to a large % of their stock, but forget that things like ratchets, preferences and double dips can render a holding a large percentage of the stock meaningless. Instead focus on what happens to the cash at a typical exit, i.e. the cash waterfall. Brian Caulfield (a VC here in Dublin) talks about focussing on the cash waterfall, that is, what happens at exit in a trade sale.

Founders often obsess about hanging onto to a large % of their stock, but forget that things like ratchets, preferences and double dips can render a holding a large percentage of the stock meaningless.

Instead focus on what happens to the cash at a typical exit, i.e. the cash waterfall.

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