Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

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John Wiley & Sons, Nov 18, 2016 - Business & Economics - 304 pages
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Get the inside scoop on what venture capitalists want to see in your startup as you hit the fundraising trail.

This is the highly anticipated third edition of the best-selling book which has become the definitive resource for understanding venture capital fundraising. Whether you are an entrepreneur, lawyer, student or just have an interest in the venture capital ecosystem, Venture Deals is for you. The book dives deeply into how deals are constructed, why certain terms matter (and others don’t), and more importantly, what motivates venture capitalists to propose certain outcomes. You’ll see the process of negotiating from the eyes of two seasoned venture capitalists who have over 40 years of investing experience as VCs, LPs, angels, and founders. They will teach you how to develop a fundraising strategy that will be a win for all parties involved.

This book is designed to bring transparency to the venture capital funding process and includes such topics as:

  • How to raise money;
  • What terms matter and which ones don’t;
  • How to negotiate a fair deal for everyone;
  • What makes venture capitalists tick, including how they are compensated and motivated;
  • How companies are valued by venture capitalists;
  • How all current structures of funding work, including convertible debt, crowdfunding, pre-sales and other non-traditional methods;
  • How these particular issues change through different stages of financing (seed, early, mid and late); and
  • How to avoid business and legal pitfalls that many entrepreneurs make.

And as in the previous editions, this book isn’t just a one-sided opinion from venture capitalists, but also has helpful commentary throughout from a veteran CEO who has raised many rounds of financing from many different investors.

If you are ready to learn all the secrets and ins and outs of fundraising, Venture Deals is an essential read.

 

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Contents

The Art of the Term Sheet
1
Chapter 1 The Players
5
Chapter 2 How to Raise Money
19
Chapter 3 Overview of the Term Sheet
37
Chapter 4 Economic Terms of the Term Sheet
39
Chapter 5 Control Terms of the Term Sheet
67
Chapter 6 Other Terms of the Term Sheet
81
Chapter 7 The Capitalization Table
103
Chapter 14 Letters of IntentThe Other Term Sheet
175
Chapter 15 Why Do Term Sheets Even Exist?
197
Chapter 16 Legal Things Every Entrepreneur Should Know
203
Authors Note
211
Sample Term Sheet
213
Sample Letter of Intent
223
Additional Resources
231
Foreword to the First and Second Editions
235

Chapter 8 Convertible Debt
107
Chapter 9 Crowdfunding
123
Chapter 10 How Venture Capital Funds Work
129
Chapter 11 Negotiation Tactics
147
Chapter 12 Raising Money the Right Way
165
Chapter 13 Issues at Different Financing Stages
171
Glossary
237
About the Authors
247
Index
249
Startup Communities
261
EULA
272
Copyright

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About the author (2016)

BRAD FELD has been an early-stage investor and entrepreneur for over twenty-five years. Prior to co-founding Foundry Group—a Boulder, Colorado-based venture capital firm—he co-founded Mobius Venture Capital. Brad also founded Intensity Ventures, a company that helped launch and operate software companies. Prior to this, Brad founded Feld Technologies. He is also a founder of Techstars and has been active with non-profit organizations, including acting as chairperson for the National Center for Women in Technology.

JASON MENDELSON has 20 years of experience in the venture industry. Prior to co-founding Foundry Group, Jason was a Managing Director and Chief Administrative officer at Mobius Venture Capital, where he also served as the firm's general counsel. Besides his experience as a venture investor, Jason has also been a software engineer, startup lawyer, and a co-founder of SRS | Acquiom. He is an adjunct at the University of Colorado Law School where he co-teaches a course on venture capital and entrepreneurship.

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