Comments on: Create a market for your shares

By: Thoughts on Investing - Venture Hacks

Thoughts on Investing - Venture Hacks — Mon, 07 Mar 2011 03:29:14 +0000

[...] startups are getting better at creating a market for their shares and unbundling capital, control, and advice. This is where AngelList can [...]

By: Are all the good venture capital deals competitive? « Yet Another VC Blog

Are all the good venture capital deals competitive? « Yet Another VC Blog — Sun, 01 Feb 2009 15:43:16 +0000

[...] I don’t know where I net out on this topic yet as an investor, but I can certainly tell you one thing. If you are an entrepreneur, you’ll end up with much better investment terms if you create a market for your shares. [...]

By: VC Fund Raising Manual - 3 The Approach « Specific Marketing

VC Fund Raising Manual - 3 The Approach « Specific Marketing — Sun, 22 Jun 2008 13:50:58 +0000

[...] line up the approach to all the VCs that you care about, and then to execute them simultaneously. I am no the only one thinking this, by the way. Approach all these investors at the same time. The reason for this is as follows: unless you do [...]

By: Brandon

Brandon — Thu, 11 Oct 2007 14:57:38 +0000

Nivi -

Leveraging an investment firm against another is a great strategy if you are looking to raise the entire funding from one firm. What about the scenario where you may need to raise funding from three or four various firms/funds in order to complete the round (e.g. – Angel round)?

How successfully can one negotiate and leverage when multiple investors will make up the same round?

By: Nivi

Nivi — Mon, 17 Sep 2007 21:56:39 +0000

I don’t know any specific firms but check out sources like http://www.vcjnews.com and http://www.pewnews.com

Also check with the major law firms in Silicon Valley and Boston.

By: arim

arim — Mon, 17 Sep 2007 18:01:19 +0000

Hello,

I had a question and thought i should ask here.

I am a founder of a startup and have shares that are both preferential and common (was also an investor in the company). Now the board wants to bring a new ceo and I intend to leave the company. Nn such cases if I wanted to get some liquidity and want to sell some shares are there firms that buy founders stock to give liquidity (if there is none I think it is a good idea to start one!). The company is going through a financing but might not give me liquidity.

Can any one suggest what are the best ways to get liquidity? Please help me here.

By: Nivi

Nivi — Fri, 14 Sep 2007 07:16:30 +0000

You don’t need to say an investor’s name to say that you have an offer from another top-tier firm. They will also see it through your confidence and leverage.

Giving them the name of other prospective investors is an invitation to collude. But I’m not saying you should never do it, especially when you’re expecting a term sheet from a top-tier investor that can steer the herd.

By: Anonymous

Anonymous — Fri, 14 Sep 2007 06:07:26 +0000

Nivi,

I was under the impression telling them about other investors eying your startup provokes them to move faster in closing deals.

Question is what can they really do if you reveal the name of another firm looking to finance your startup? Tell them "hey other firm, we want the spoils all to ourselves so back off"?

By: Nivi

Nivi — Thu, 13 Sep 2007 08:52:22 +0000

Great points. Re collusion: don't tell your prospective investors whom else you are talking to.

By: Anon

Anon — Thu, 13 Sep 2007 07:22:05 +0000

Great post. It’s beneficial to create as efficient a market as possible for your shares. Having multiple alternatives sure beats trying to justify higher valuations through abstract debates about the market or likely outcomes. It also gets investors to move their asses and all of the other good things mentioned here.

Some gotchas I’ve encountered:

1. All money is not created equal: Really good investors add a lot of value. The downside is they pay less than everybody else. So don’t expect Sequoia to move too much on price just because some hooligan is offering some ridiculous deal. And be prepared (i.e. have a BATNA that’s actually good) in case your favorite investor simply says no.

2. Collusion: Investors have deep networks, and long-term relationships. As much as it would be nice if the market were efficient, the bidding for startups isn’t like random people duking it out for a beanie baby on eBay: investors tend not to overtly screw each other/steal deals. Especially when, gosh, they could work together to drive the price down. It helps to have degrees of separation between your investors or angels in different syndicates.