Venture Hacks

Q: Everybody is telling us to raise smart money. What’s the difference between smart money and dumb money?
“The best assumption to make is that your VC’s primary value add is the cash they are investing. Then you’ll always be surprised on the upside.”
— Marc Andreessen
Summary: Smart money is money plus the promise of help that’s [...]

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We get lots of email from people asking for advice. We’re going to start answering the most interesting questions here, so everyone can participate in the discussion.
Got a question? Send it to ask@venturehacks.com. We read every question. Names will be changed to protect the innocent.
In the meantime, catch up on past editions of Ask Venture [...]

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Q: Should I raise money from VCs or angels, all things being equal?
There is no prototypical VC or angel. Instead of pitting VCs versus angels, consider their perceived pros and cons and choose the best available investor.
Angels are perceived to have less money, invest for fun, make their investment decisions quickly, and not ask for [...]

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Q: Should I sell my company or raise capital and go for it?
Sell if it dramatically changes the lives of the founders and the early team. Every dollar after your “fuck you money” is icing—get your financial independence first and make the icing at your next company. You can also use an earn-out at the [...]

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Q: Is the venture capital industry doomed?
No. Venture capital invested in the U.S. is increasing and VCs are a critical part of the startup ecosystem—I’m grateful they exist.
The rate of innovation is increasing and that innovation needs capital to get in customer’s hands. Capital invested in startups is going to increase, not decrease.
It’s wonderful that [...]

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Q: What’s the biggest mistake entrepreneurs make when they’re raising money?
Entrepreneurs focus on valuation when they should be focusing on controlling the company through board control and limited protective provisions.
Valuation is temporary, control is forever. For example, the valuation of your company is irrelevant if the board terminates you and you lose your unvested stock.
The [...]

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I read, like, and regularly disagree with a great blog called Ask the VC . They recently answered a question about supra pro rata rights—here are our thoughts on the topic.
Q: Can you explain what supra pro-rata is? It seems to be showing up in some VC term sheets now. What’s the impact on the [...]

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