I think we can all agree that the startup industry pays too much attention to VC. Our conferences, press, and tweets are dominated by VC-related news. Which fund just raised more capital? Who got funded? Who’s the latest unicorn? I contribute to that fixation in this blog all the time.
With the rise of accelerators, the holy grail for young startups these days seems to be to get into YC as early as possible and then go on to immediately raise from VCs post demo day.
There are certainly some massive successes that have followed this hype-laden path: Airbnb, Dropbox and Gusto are some of the biggest winners that come to mind. Closer to home, YC grad Vidyard is crushing it. But they passed on the hype in the Valley. They came back to Canada and took their time.Continue reading When should you get on the VC train?
All VC deals come with features and provisions that are designed to help investors get comfortable making a multi-year, completely illiquid investment into your highly risky startup.
Typical protective provisions include things like:
Liquidation preference: On exit, the investor has the choice of getting their capital back or converting their pref shares into common and just getting their portion of the exit price.
Redemption: Some kind of mechanism to enable the investor to get their capital back after some period from time. This could range from the benign (you agree to convene a committee of the board X years from now to determine – with no obligation to act – whether it’s time to sell the company), to the non-trivial (the investor can force the company to buy back their shares, likely triggering a variety of unnatural events up to and including the sale of your company).Continue reading Managing Investor Protections: What you need to know
There is so much emphasis on user experience and design these days, it’s no surprise that this emphasis would make it’s way into how companies get funded.
I owe Mike McDerment, co-founder and CEO of FreshBooks for this insight. Together, we raised FreshBooks’ 1st and only institutional funding round last year. Mike has some very particular views on the importance of “experience”. In fact, the company’s manta is “execute extraordinary experiences everyday”. This saying impacts everything, big and small, throughout the company.
Back to fundraising: Investors see more opportunities than ever before. How do you stand out? First and foremost, have traction. This more than anything else gets investor attention. But assuming you have the three Ps (Product, People and Progress – aka traction), then I believe that the experience of raising makes all the difference.Continue reading The fundraising experience