Comments on: The problem with tranched VC investments http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/ Mon, 15 Mar 2010 00:43:58 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: anonymous http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-7182 anonymous Sun, 07 Mar 2010 05:29:32 +0000 http://www.cdixon.org/?p=261#comment-7182 I am an engineer's engineer who joined a vc funded startup without knowing much about how vc operated and how much trouble the startup was in. Investors had thrown out some cofounders and had placed a vc partner as ceo. This vc/ceo one day singled me out and laid me off in a very bad way (he's known for being dismissive and rude) with no explanation to anyone incl mngmt. I am looking for some advice on whether I can do something related to termination terms (layoff vs others). Does someone know any engineer vs vc forum where i could get some feedback from people more familiar with such stuff? I am an engineer’s engineer who joined a vc funded startup without knowing much about how vc operated and how much trouble the startup was in. Investors had thrown out some cofounders and had placed a vc partner as ceo. This vc/ceo one day singled me out and laid me off in a very bad way (he’s known for being dismissive and rude) with no explanation to anyone incl mngmt.
I am looking for some advice on whether I can do something related to termination terms (layoff vs others). Does someone know any engineer vs vc forum where i could get some feedback from people more familiar with such stuff?

]]> By: Finance Geek » Seed investments from big VCs http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-4032 Finance Geek » Seed investments from big VCs Tue, 13 Oct 2009 12:26:18 +0000 http://www.cdixon.org/?p=261#comment-4032 [...] The problem with tranched VC investments (cdixon.org) [...] [...] The problem with tranched VC investments (cdixon.org) [...]

]]> By: Twitter Trackbacks for cdixon.org / The problem with tranched VC investments [cdixon.org] on Topsy.com http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1751 Twitter Trackbacks for cdixon.org / The problem with tranched VC investments [cdixon.org] on Topsy.com Sun, 30 Aug 2009 03:42:13 +0000 http://www.cdixon.org/?p=261#comment-1751 [...] First Tweet 15 days ago cdixon chris dixon Highly Influential the problem with tranched venture capital investments http://www.cdixon.org/?p=261 view retweet [...] [...] First Tweet 15 days ago cdixon chris dixon Highly Influential the problem with tranched venture capital investments http://www.cdixon.org/?p=261 view retweet [...]

]]> By: Options on early stage companies | Igniting Startups - nPost http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1584 Options on early stage companies | Igniting Startups - nPost Wed, 26 Aug 2009 21:43:28 +0000 http://www.cdixon.org/?p=261#comment-1584 [...] The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail here.) [...] [...] The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail here.) [...]

]]> By: The problem with tranched VC investments | Igniting Startups - nPost http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1349 The problem with tranched VC investments | Igniting Startups - nPost Fri, 21 Aug 2009 17:07:34 +0000 http://www.cdixon.org/?p=261#comment-1349 [...] From cdixon.org [...] [...] From cdixon.org [...]

]]> By: Ryan Graves http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1294 Ryan Graves Wed, 19 Aug 2009 19:40:17 +0000 http://www.cdixon.org/?p=261#comment-1294 Chris, I'm continually impressed with your posts. I always learn. Keep it up, I'll be around. Subscribing to RSS now. Cheers, Ryan Chris,
I’m continually impressed with your posts. I always learn. Keep it up, I’ll be around.

Subscribing to RSS now.
Cheers,
Ryan

]]> By: Dave Hendricks http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1255 Dave Hendricks Tue, 18 Aug 2009 18:13:35 +0000 http://www.cdixon.org/?p=261#comment-1255 I've worked at startups that have been tranched by VCs. I mistakenly did not pose the questions that Chris advises a prospective employee to ask. Instead of driving sales and marketing I ended up supporting BOD presentations and coming up with sales projections to satisfy the tranching needs. And guess what? We didn't get the funds that the CEO said were there for the asking, when we needed it. Never again. Great post. I’ve worked at startups that have been tranched by VCs. I mistakenly did not pose the questions that Chris advises a prospective employee to ask. Instead of driving sales and marketing I ended up supporting BOD presentations and coming up with sales projections to satisfy the tranching needs. And guess what? We didn’t get the funds that the CEO said were there for the asking, when we needed it. Never again. Great post.

]]> By: cdixon.org / Options on early stage companies http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1244 cdixon.org / Options on early stage companies Tue, 18 Aug 2009 05:44:02 +0000 http://www.cdixon.org/?p=261#comment-1244 [...] The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail here.) [...] [...] The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail here.) [...]

]]> By: Johan Söderberg http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1178 Johan Söderberg Sun, 16 Aug 2009 13:16:23 +0000 http://www.cdixon.org/?p=261#comment-1178 I agree with bunterberg. I would never give the VC the upper hand like that without getting anything in return. In my opinion it is clearly possible for the entrepreneur to get upside potential in such a deal. For instance if certain goals are beaten the number of shares for the same amount of VC-money will be lower. It is all about how well you negotiate with the VCs. I agree with bunterberg. I would never give the VC the upper hand like that without getting anything in return. In my opinion it is clearly possible for the entrepreneur to get upside potential in such a deal. For instance if certain goals are beaten the number of shares for the same amount of VC-money will be lower. It is all about how well you negotiate with the VCs.

]]> By: bunterberg http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/comment-page-1/#comment-1177 bunterberg Sun, 16 Aug 2009 09:15:11 +0000 http://www.cdixon.org/?p=261#comment-1177 Found an answer in various blog posts (by Peter Davis) via Fred Wilsons hints. Instead of tranching she would plan this case via two rounds while the investor of the first round agrees upon details (and a higher pre) for the eventually upcoming round. She probably needs a strong standing to close such a deal but if it works out she saves time and shares. Anyways, finally it will still be up to the investor to actually do the second round and if not she might have a serious problem to find alternatives. Found an answer in various blog posts (by Peter Davis) via Fred Wilsons hints. Instead of tranching she would plan this case via two rounds while the investor of the first round agrees upon details (and a higher pre) for the eventually upcoming round. She probably needs a strong standing to close such a deal but if it works out she saves time and shares.

Anyways, finally it will still be up to the investor to actually do the second round and if not she might have a serious problem to find alternatives.

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