Venture Deals
116 Posts
Ask about anything related to doing venture deals, including valuation, due diligence, negotiation, terms, and exiting. The data incorporates questions from active venture investors answered by experts and peers.
How do you determine the number of shares in a company?
How do you determine the number of shares founders have?
How do you determine employee option pool size?
How do you determine what amount SAFE converts at?
How to determine how much to raise and not loose too much stake in the company?
Is it Ok for a fund to invest into a company via an AngelList RUV?
Is it Ok for a fund to invest in a startup via their AngelList RUV? It's a highly oversubscribed deal and the company is limiting our check size to significantly less than what we normally do and is also asking to come in via their RUV. What are the challenges with doing this if it's even Ok to do?
When does partner review come in? During the review, diligence or decision stage?
Our deal funnel has a few stages defined. I was wondering in which of these the partners come in and make a decision. Are there different approaches, depending or the fund size or investment thesis or personnel preferences even?
How to become a scout
How do you become a VC scout? As far as I understand, it’s usually a freelance or part-time position, and companies typically don’t advertise such roles. However, I recall seeing some venture funds that had a link on their website, something like “Become a Scout with Us.” How can you find these kinds of programs?
It seems logical for a fund’s management company to sign agreements with lots of scouts—maybe a hundred—so they can bring well-researched startups. But for some reason, that doesn’t appear to be the norm in the market. Has anyone tried reaching out to a fund’s managing directors directly and offering their services as a scout?
Does investing in a round along Sequoia https://www.sequoiacap.com/ generally lead to higher or average returns?
A post on Linkedin https://www.linkedin.com/posts/activity-7303170504356466690-5JL9?utm_source=share&utm_medium=member_desktop&rcm=ACoAAACD3IoBHOj2HcVqY8B_nToaE_XXXrZKAfA argued against copying other VCs' strategies. Specifically, it offered this example: when "2️⃣ Smaller firms pile in—not because they’ve built real conviction, but because the lead investor is prestigious. If Sequoia is in, it must be good, right?"
Is there any evidence that joining a round in which Sequioa or any of the funds mentioned below are participating will result in average returns?
Sequoia Capital: $2.85 billion
Andreessen Horowitz: $2.75 billion
Lightspeed Venture Partners: $2.2 billion
Tiger Global Management: $2.1 billion
Insight Partners: $2 billion
FAST Agreement and Advisory Shares
How does a Founder & CEO of a startup provide advisory share, when they don’t know how many shares there are each year?
Who does background checks on startup founders?
Who does background checks on startup founders? Is this is part of the process of due diligence for each deal?
How to charge deal legal fees to a portfolio company - for a standard equity investment
Hi There,
Could someone walk me through the mechanics of how funds typically pay for deal legal fees out of the investment amount?
Specifically, if I want to invest 100K in a startup, and the legal fees will be 5K:
* does the term sheet and equity agreement state 95K?
* does the fund pay the 5K to the lawyers directly? and transfers 95K to the company once the deal is closed?
* in the deal memo and other investment documents, is this recorded as a 100K deal or a 95K deal?
* are the deal metrics (DVPI, MOIC) calculated based on 95K or 100K?
Am closing a warehouse deal in the next few weeks so would be great to get some guidance on how others have done this in the past.
Can I invest in SPVs using my VC fund?
Could my venture capital fund be utilized for investments in Special Purpose Vehicles (SPVs)? Could I invest in pass-through entities like Special Purpose Vehicles (SPVs) through my venture capital fund?
Does a post money SAFE got diluted with the Series A?
I would like to know the step-by-step process.
Scenario:
I invested in the pre-seed round via a post-money SAFE of $100k at a $1M post-money CAP valuation. The startup reached Series A and raised $5M at a 50M valuation.
How much company participation do I owe after the Serires A transaction is closed? 10%?
Do I have the same preferred stocks that the company issued for the Series A investor(s)?
How should a portfolio company's valuation be updated when there there is a discount in the deal terms?
Question reformulated for clarity, but of course let us know if it does not address the original question.
How can an investor know if a startup issues a SAFE to another investor with a different valuation? How can the investor be aware of it or track it?
Question reformulated for clarity, but of course let us know if it does not address the original question.
Not able to submit deal memo for review
Unable to submit the deal memo for review. The top right side button is disabled and on tab of submit - clicking on button does not work - tried on both safari and chrome on macbook.
Integrations
Is there a way to integrate with platforms such as Notion or Airtable? It will be easier to manage deal flow.
Could you please share best practice on how to write investment memo
could you share your favourite examples?
Is investing in non-voting shares of a pre-seed company a non-starter?
Great company with good traction and an impressive founder.
Is vesting as a requirement to invest in startups?
What are the common terms to ask for vesting when investing in startups?
Pro-Rata Negotiations
What critical factors do Venture Capitalists prioritize in negotiating demands for Pro-Rata terms, given their case-by-case nature?
Optimum diversification in pre-seed and seed stages
I would like to ask about the number of startup investments in both pre-seed and seed stages to reach optimum diversification for a Fund of about €10 Million.
Redeemable preferred warrants
What are best use cases for redeemable preferred warrants? I have heard they are most useful for seed rounds if founders want to maintain equity (by redeeming it) prior to a Series A, and I have also that they can be very expensive money. When does it make the most sense for an investor to issue them?
I was an entrepreneur in a startup, in which I have fulfilled my vesting requirements. Can this be considered as deal warehousing?
I was an entrepreneur in a startup, in which I have fulfilled my vesting requirements. Can this be considered potential deal warehousing?
Deal Warehousing
Week 4 sprint asks for rockstar fast growing deals to warehouse. If a fund's focus is seed or pre-seed, i. e. before any or significant traction, how should one think about the definition of "fast growing rockstar deals"?
Create a term sheet for a startup
How do I put together term sheet fast and easy?
Term Sheet for a Start Up
Is it possible to draft a term sheet for a start up venture without having to use a lawyer? Are there standard templates? Anything I should consider in deciding what to do?
Warehousing Investments from Limited Company + Warehousing Future Syndicated Deals
I've read that one can transfer/warehouse angel investments but not SPVs.
I made some angel investments directly from my personal account and also from a limited company that I have, any concerns about transfering them from my company?
I got a few deals that I am looking into and got some angels who join me on SPV and give me carry. Should I do my investment directly so I can warehouse it and do the SPV for the other angels?
If you're planning to transfer an angel investment as a warehouse deal, what should be the minimum size?
Good evening VC Lab team!
The GPs of Plaintext have made recent angel investments that are in the $10-25k range each. We're hoping to raise a $10m fund so these would typically be too small given we plan on making 30-40 investments.
Nonetheless, can/should we use them to fund our 1% GP commitment or as warehouse deals?
Thank you,
Fran
Deal Warehouse
I invested in a company as a fund employee (SAFT investment) deploying fund capital, but was also given an opportunity to invest my personal capital directly into the company's SAFT offering. Do I need to ask for permission from my prior fund to use my investment portion in the company to warehouse the deal? I think, not, b/c the purchase agreement is between me and the company, but would like to confirm.
SAFE Notes and their purpose
Wasn't the original purpose of SAFE notes to be a bridge to a near future priced round of equity instead of a round unto itself for 18-24 months of runway?
Can I transfer a warehoused investment to the fund at FMV?
Can I transfer a warehoused investment to the fund at FMV?
What types of warehoused deals should you have?
What types of warehoused deals should you have?
What is Convertible Preferred Stock
What is Convertible Preferred Stock
What is a Convertible Note
What is a Convertible Note
What is a SAFE Note (Simple Agreement for Future Equity)
What is a SAFE Note (Simple Agreement for Future Equity)
What is a Special Purpose Vehicle (SPV)
What is a Special Purpose Vehicle (SPV)
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