Author: Ryan Roberts
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Top 5 Worst Seed Round Terms For Startups
Here’s a list of the top 5 worst seed round terms that cause harm to startups at the seed financing stage and therefore should be avoided: 5. Control “Control” of a startup can manifest itself in various forms such as equal (or investor-favorable) representation on the board of directors or a requirement of obtaining seed…
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X Does Not Always Equal X
I’ve done quite a few recent seed deals using various ‘standard’ seed financing docs (Series Seed, TechStars Series AA, etc.). While using these document sets can help reduce transaction costs and the time to close, a startup can run into trouble by trusting deal documents without verification. For example, a startup requested I review a…
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Big Boy Expenses for Entrepreneurs
While the stereotypical tech startup entrepreneur is 23 years old, single and has no children, the reality is that many tech startup entrepreneurs are married and/or have children. Don’t avoid “big boy” expenses just because you are bootstrapping. That is, make sure you have (or at least look into obtaining) insurance against life’s big risks…
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Non-Dilution Rights are Wrong
I hate non-dilution rights and if you are an entrepreneur you should, too. I’m not talking about price-based anti-dilution protection that is typical in an angel or VC round. What I’m referring to is a right given to a particular stockholder so that such stockholder’s equity in the company is not diluted by any future…
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How to Evaluate a Startup Accelerator Offer
Great news — your startup just got accepted to an accelerator! But before your startup signs up and cashes that $[25,000] check, your startup’s co-founders should sit down and evaluate the accelerator offer. The following are some issues to consider and actions to take before accepting an the accelerator offer: (1) Calculate Valuation and Determine…
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Term Sheet Purgatory
There’s plenty of advice on (1) how to attract VCs and (2) how to negotiate a venture capital term sheet. What gets less attention is the messy middle, the period between an investor expressing interest and you actually receiving a term sheet. I call that waiting period term sheet purgatory. Term sheet purgatory is an…
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The $10,000 Sentence
You’re building a startup, and everything is scarce, especially capital. So when a legal issue pops up (like incorporation), it’s normal to do a cost-benefit analysis before hiring a startup lawyer. I understand the instinct to make sure you’re getting value for a small budget. I did the same thing when I hired a large…
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November Rain
Axl Rose started working on “November Rain” in 1983, about eight years before Guns N’ Roses released it. Early on, he had a piano-only version. By 1991, the final track was a full-scale power ballad that fit the moment and the band’s sound. What worked as a concept in 1983 still worked in 1991, but…
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Why a Finder is a Loser
When a startup considers paying a “finder” for investor introductions, I usually have the same conversation with founders. It goes something like this. A typical conversation about a finder Startup: A finder knows a lot of investors and will introduce us if we pay 6% of any capital we raise through those introductions. Me: Is…
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Embrace the Martian
Real talk. Service providers like startup lawyers aren’t exactly the crowd favorites at startup events and have a hard time fitting in with the crowd. For the past year or so, every time I’m about to enter a startup event Kid Cudi‘s “Embrace the Martian” song pops into my head. This lyric in particular: All…