This document provides an overview of preparing a startup for venture capital investment. It discusses various sources of startup funding including founders' personal savings, debt financing, government grants, friends and family investments, angels/seed investors, and institutional venture capital. It then focuses on venture capital, explaining the economics from the investors' perspective, factors that make a company a good fit for VC, and considerations around management, metrics, and choosing a VC firm. The document also covers structuring recommendations for venture capital including choice of entity, founder equity arrangements, currency (options vs. stock), vesting, and other deal terms.
Advisors: .1 to 2%. 2 to 4 years. FAST – 2 years. Not a board.
409A valuation, S corporations, LLCs, Options with deferred price, tax issues
Founder licensing in
JV contracts
Score card =apply factors to average pre money valuations; VC method =Harvest Value/Anticipated ROI (10x to 30X); Berkus method= 5 characteristics add up to $500k each to valuation; Cayenne calculator=25 question calculator; Risk Factor summation=assess risk factors –+1 or -1 and multiply by $250k;
Score card =apply factors to average pre money valuations; VC method =Harvest Value/Anticipated ROI (10x to 30X); Berkus method= 5 characteristics add up to $500k each to valuation; Cayenne calculator=25 question calculator; Risk Factor summation=assess risk factors –+1 or -1 and multiply by $250k