Subscribe via Email
Follow Us On TwitterAll Posts: ‘VC Issues’
Words of Wisdom from Vinod Khosla
by Scott Edward Walker on September 12th, 2013
To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.” Each week, we share a favorite video clip of a successful entrepreneur, investor or business leader on a variety of topics. This week, we present Vinod Khosla, a brilliant entrepreneur and founder of Khosla Ventures.
Top Ten Posts in 2012
by Scott Edward Walker on January 1st, 2013
Happy New Year! Below is a list of my top ten posts in 2012 based on pageviews. You should also check out “Managing Startups: Best Posts of 2012,” a solid compilation by Tom Eisenmann, Professor at the Harvard Business School, of the best startup posts in 2012 (including my posts below addressing convertible notes). Cheers, Scott
Venture Capitalists at Work – Part 3
by Scott Edward Walker on September 6th, 2012INTRODUCTION
This is the third and final part of my series on the book Venture Capitalists at Work, which is a solid collection of interviews by Tarang Shah of certain highly-successful investors. I have again set forth below some nuggets for entrepreneurs; and, in case you missed them, you can check out Venture Capitalists at Work – Part 1 and Venture Capitalists at Work – Part 2. Many thanks, Scott
Venture Capitalists at Work – Part 2
by Scott Edward Walker on July 31st, 2012INTRODUCTION
This is part 2 of my series on Venture Capitalists at Work, which is a solid collection of interviews by Tarang Shah of certain highly-successful investors. Below are some more nuggets for entrepreneurs; and, in case you missed it, you can check out part 1 here. Cheers, Scott
Venture Capitalists at Work – Part 1
by Scott Edward Walker on June 26th, 2012INTRODUCTION
I just finished reading the book Venture Capitalists at Work, which is a collection of solid interviews by Tarang Shah of certain highly-successful investors. I have set forth below some nuggets for entrepreneurs. This is part one of a three-part series. I hope entrepreneurs find a few of the quotes helpful and get a better understanding of how VC’s think. Thanks, Scott
Fundraising 101: Checklist for Entrepreneurs
by Scott Edward Walker on May 9th, 2012
I’ve been a corporate lawyer for 18+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make in connection with fundraising. Accordingly, I thought it would be helpful to provide a simple checklist tailored to first-time entrepreneurs. I’ve also included links to prior posts for a detailed discussion.
Convertible Note Seed Financings: Econ 101 for Founders
by Scott Edward Walker on April 22nd, 2012
This post is the second part of a three-part primer on convertible note seed financings. Part 1, entitled “Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask),” addressed certain basic questions, such as (i) what is a convertible note? (ii) why are convertible notes issued instead of shares of common or preferred stock? and (iii) what are the advantages of issuing convertible notes?
This part 2 will address the economics of a convertible note seed financing and the three key economic terms: (i) the conversion discount, (ii) the conversion valuation cap and (iii) the interest rate.
Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? and (ii) what happens if the maturity date is reached prior to the note’s conversion to equity?
[Note: This post was originally published on TechCrunch.]
Everything You Ever Wanted to Know About Convertible Note Seed Financings (But Were Afraid To Ask) – Part 1
by Scott Edward Walker on April 9th, 2012
Introduction
We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook.
As a result, the pendulum has swung dramatically in the founders’ favor, and the issuance of convertible notes for seed financing has never been more prolific. Indeed, as a corporate lawyer for 18+ years, I have seen this development first-hand.
VC Term Sheets – Investors’ Option to Walk
by Scott Edward Walker on September 14th, 2011
Introduction
This post originally appeared in the “Ask the Attorney” column I am writing for VentureBeat; it is part of my ongoing series regarding venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
- protective provisions
- drag-along provisions
- pay-to-play and pull-up provisions
- conversion rights
- non-contractual rights
- redemption rights
In today’s post, I examine the non-binding and conditional language in term sheets.
Should I Use My Investor’s Lawyer?
by Scott Edward Walker on August 31st, 2011Introduction
This post was originally part of the “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998 (San Francisco) or 310-288-6667 (Los Angeles). Thanks, Scott
Question
We’re a startup based in Palo Alto, and we just received a Series A term sheet for a $725,000 investment. The investor is kind of insisting that we use his lawyer at a big Valley firm to represent us. He said that he doesn’t need a lawyer, and this will save us a lot of money. We’re first time entrepreneurs, and we don’t know if this is standard practice and what we should do. Any advice would be appreciated.
Venture Capital Term Sheets – Redemption Rights
by Scott Edward Walker on July 7th, 2011Introduction
This post originally appeared in the “Ask the Attorney” column I am writing for VentureBeat; it is part of my ongoing series regarding venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
- protective provisions
- drag-along provisions
- pay-to-play and pull-up provisions
- conversion rights
In today’s post, I examine the redemption rights of investors.
Venture Capital Term Sheets: Conversion Rights
by Scott Edward Walker on June 9th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat; it is another installment of my ongoing series regarding venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
- protective provisions
- drag-along provisions
- pay-to-play and pull-up provisions
In today’s post, I examine conversion rights of investors.
VC Term Sheets – Pay to Play Provisions
by Scott Edward Walker on May 19th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat. Below is a longer, more comprehensive version, which is part of my ongoing series on venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
- protective provisions
- drag-along provisions
In today’s post, I examine “pay-to-play” provisions, which can be an important protection for the founders.
VC Term Sheets – Drag-Along Provisions
by Scott Edward Walker on May 5th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat. Below is a longer, more comprehensive version, which is part of my ongoing series on venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
- protective provisions
In today’s post, I examine “drag-along” or “bring-along” provisions, which can be very tricky.
Should We Execute the “Series Seed” Documents with No Negotiations?
by Scott Edward Walker on April 21st, 2011Introduction
This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Below is a longer, more comprehensive version. Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998. Many thanks, Scott
VC Term Sheets – Protective Provisions
by Scott Edward Walker on April 7th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat. Below is a longer, more comprehensive version, which is part of my ongoing series on venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
- Board control
Today’s post relates to protective provisions, which is something VC investors almost always require in a priced round (i.e., the issuance of preferred stock), as opposed to the issuance of convertible notes.
VC Term Sheets – Board Control
by Scott Edward Walker on March 24th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat. Below is a longer, more comprehensive version, which is part of my ongoing series on venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
- dividends
Today’s post relates to the composition of the Board of Directors and specifically addresses the issue of who should control the Board following a Series A financing.
VC Term Sheets – Dividends
by Scott Edward Walker on March 3rd, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” series I am writing for VentureBeat. Below is a longer, more comprehensive version, which is part of my series on venture capital term sheets. Here are the issues I have addressed to date:
- common mistakes dealing with VC’s
- valuation
- liquidation preferences
- stock options
- exploding term sheets and no-shop provisions
- anti-dilution provisions
Today’s post relates to dividends and how to protect the company from over-reaching by the investors.
What Is a Price-Based Antidilution Adjustment?
by Scott Edward Walker on February 17th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” series I am writing for VentureBeat. Below is a longer version. Please shoot me any questions in the comments section or, if you prefer confidentiality, via email at .
What Are Exploding Term Sheets and No-Shop Provisions?
by Scott Edward Walker on February 9th, 2011Introduction
This post originally appeared as part of the “Ask the Attorney” series I am writing for VentureBeat. Below is a longer, more comprehensive version. Please shoot me any questions in the comments section or, if you prefer confidentiality, via email at .
How Do I Value My Startup?
by Scott Edward Walker on September 1st, 2010Introduction
This post was originally part of my weekly “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998. Many thanks, Scott
Helping Entrepreneurs Succeed: John Doerr
by Scott Edward Walker on August 30th, 2010To Our Clients & Friends: Welcome to our weekly series entitled “Helping Entrepreneurs Succeed.” Each week, we post a short video clip of a successful entrepreneur, investor or business leader on a variety of topics to help entrepreneurs succeed.
This week, we present legendary investor John Doerr, a partner at Kleiner Perkins. Eric Schmidt calls John “one of Google’s best board members”; and Jeff Bezos noted that “Doerr (and Kleiner) is the center of gravity in the Internet.” In this interesting, one-minute clip from 2005 (courtesy of Stanford University’s Entrepreneurship Corner), John discusses how to negotiate valuations with VC’s and related issues.
I included this clip as a supplement to my blog post today on VentureBeat in which I advised entrepreneurs that: “[Y]ou need to get out there and effectively pitch a bunch of VC’s in your space and get them excited about your venture. By doing so, you can, in effect, drive the market by creating a competitive environment and playing the VC’s off of each other.” Many thanks, Scott
What Is a Liquidation Preference?
by Scott Edward Walker on August 25th, 2010Introduction
This post was originally part of my weekly “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998. Many thanks, Scott
“Ask the Business Attorney”: What Are the Most Common Mistakes Startups Make Dealing with VC’s?
by Scott Edward Walker on July 28th, 2010Introduction
This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat; below is a longer, more comprehensive version. Please feel free to call me directly if you have any questions (415-979-9998). Thanks, Scott