VC Financial Conditions
We start with this page with this section as it's what founders need to hear the most as a preface to VC investing.

VC and Sharks contrary to popular belief, DO WANT COLLATERAL security. They don't want a house or car (though may love it if you put it up, do so if you want). How they achieve this is in looking at the current sales and profits and orders (assets if any but not often considered) and seeing how long it will take the existing business (sales, profits) without growth in total growth-flatline to get their money back, and then considering the possible deals they know that they can personally go and do to get their money back plus return. You do need to give something in total security to VC and you should. You should not be asking them to take gambles and risks. If you have a legitimate business prospect you should secure every last step for them guaranteeing not only that they will get all their money back but a very nice return as well. Why should they give you their money and not the bank or bonds or blue chip stock? Those guarantee it plus interest and dividends guaranteed. You have to compete with this. The faster you realize it the better off you will be. They are not throwing money here and there in wild gambles (okay some are, snapchat IPO, beard washes, chinese APPs and websites or P2P lending sites, etc) but face it, most people want their money back and those throwing money are usually doing so at tidal crowd gamble investments where many are already following and they are just jumping on the piles thinking that's what works. They are visionless investors and will never invest in a concept nor early stage startup without visionaries doing so first in big fashion.

Entrepreneurs should be going in with a paradigm shift in attitude. They should be offering 100% of shares to the investor on every deal until the investor's money is paid back with a great return, and then the shares come back to the founders. That doesn't mean you need to have the investor control everything, that's what contracts are for, but they should have full protection for their money or else they should not be investing with you but earning 100% guaranteed principal and guaranteed interest payments too in the bank with no risk and government insurance. If you think it's okay to ask investors to gamble and are okay with them losing some of their capital, you have no right frankly to be asking anyone to invest in your company. Investors aren't there to "try things out and take a chance" They are there to make more money, more than what the bank offers. Secure their investment. Secure their return. You can still have your career mission business after they get what they deserve paid back to them. They are helping you. They deserve respect, their money back and a great return. If you don't have the attitude for this, you don't deserve to ask for anyone's money. Face it.

VC Process
Learn The Truth about VC investing, and how it's too often done in a failed method that is against the best interests of the founder, the startups, and also the investors.
(We may be immediately passed on by some VC hitting this page, but we're willing to say what needs to be said right on the website because we believe in promoting the truth. We think deals should be healthier on all sides, more creative, more dynamic, and this helps. They are the positions least spoken of but held widely by founders as many founders are afraid to blow their chances with VCs by saying the truth)
* Disclaimer for the VCs and Sharks and learners* = Some of this can go out the window for the awesome exception creative dealmakers that will move the shells anywhere to make things work for the investment for all sides. Rare but out there. Also there are a few rare VCs and even Sharks (Your Barbara Corchranes your Jim Goetzes etc.) who really care about people and even invest to help if they can (+ needs return and deserves it wow) but it is not the norm so don't think you will find one like that we never met anyone who did yet in the small private energy innovation space in 22 countries (though maybe there was 1 somewhere)*
(this is written to benefit the Startup community as a whole and mainly for founders)
VC is a very misunderstood game. Many people act like or think or are fooled into thinking that VC cares about the founders, the people, the teams, the business, the mission or even supposedly "Changing the world" etc. The fact is however they generally couldn't care less. They are in business to make money, and to make as much of it as they possibly can, and nothing else. Business is business, and to a VC it's not personal. VC's will generally do whatever they have to do to make big money, and they aren't there for charity, nor philanthropy, nor a social club, nor a community mission, nor wiping someone's tears, nor to be some force of fair or equitable in the world, and certainly few of them have any kind of mission to "Change the world" though so many talk this just to sound good, usually it's crap. If they can rip an extra point, or ten, or 100, many VC are gonna do it. That's just how it is. Anyone thinking different, has been completely fooled. As the famous Shark on Shark Tank TV show Kevin O'leary States "You have to take the emotion out of it, it's not about people, it's just all about money."

So, lets examine what VCs do and what their job is and business is. As a VC, you buy and sell things. You want to buy these things at pennies on the dollar, a lot of them, and sell them at a very inflated price to someone else, as quickly as you can. If the price will be much higher in 1-2-5 years you may hold them for this time period. The maximum time/price sale value is what you need to figure out. Now that you have this "thing" you want to re-package it and brand it and fancy it up as much as you can, to flip it to someone. The first thing you think of before you buy is:

#1 Who can I sell this to?
#2 How much can I sell it for?
#3 When can I sell it and what return will that be?
#4 If I absolutely repackage, re-brand, repaint, and even completely chop apart and gut and rebuild this "thing" will I get more? How much? How much easier will it be to sell?
So how can I do every one of those for maximum profit value?

It's that simple folks. VC's don't usually give a crap about the founder nor his team nor the company mission, they care about THIS. $ MOney, Dollars, return, X, Cha-ching, and their careers, their reputations to peers, and portfolio return made and that's it. They aren't there to change the world nor save it nor help it. Don't hold your breath. This is VC it's not charity folks. Few ever have charitable missions nor focuses nor intentions nor even contributions in their plan anywhere whatsoever. (a few exceptions of course always exist that doesn't need to be said to intelligent people.)

So, let's compare it below again, Lets pretend you are a VC, what do you want to do? and what is your job to do for the fund in this position?
- Buy a "thing" you can sell for more at highest price (return) over as short a time as possible
- Buy as much of it as you can as cheap as you can get it
- Renovate it as much as can do for as cheap as can be done to get maximum profit out of the deal.
- Repackage it and re-brand it for maximum hype sale value
- Kick off the poor landowners if makes more profit
- Lie to them what its worth, ie. lowball them as much as possible, then highball to the buyers as much as possible.
- Fire or replace the managers with someone else with a better CV, "look" etc, so that it appears more sale-able.
- If its a company, make sure to add your friends as "partners" so that you can kick out or be in control to get rid of the others or buy them out for pennies on the dollar, or even better buy for nothing, and or get the guy to quit, or change the style, direction, model when you want if it will attract a certain likely buyer at the time.
- Strip off or sell off the company or parts or whatever you can at a higher value for quick profit when the time sees fit.

Let's face it folks, the VC's are not there to lose money, and some aren't going to pass up a chance to pad their returns with an extra 10% just to keep the founder in there or his favored teammate or his original vision or direction. They are there to make MONEY. Everyone knows it. That's the business.

Now, there is nothing wrong with your investors making a great return, hey, I want to make a Great return for my investors absolutely, but a fair return. Now, I can be trusted to be fair, and maybe you can too, but the VC's? OMG come on now, how many people in business are looking out for the other parties back? Sure the VCs claim that, (or maybe they don't) but its often BS. Many many founders and teams have been done over and hoodwinked and forced out or strong-armed or hostile takeovers etc. Also, one VC is not every VC, and the few great ones are like anything else, not well copied and not in great supply.
Don't be surprised then when VC's tell you hundreds of lies and play every trick and game in the book, to get their unfair share, and actually in the process not only bend you over a barrel, and destroy your company, your hopes, your dreams, your mission, your future, your baby, your life of work you put into this thing, but also destroy their own investments, and value for investors, your team, and your family and friends who came along also. So, let's look further into the lies VC tell, and the industry tells, which are having disastrous results in the as we know 90% fail record of VC chosen and invested startups.
VC Strategies
There are several main strategies VC use when investing in startups to make money. Founders should know these plays going in so they can know the best route to take or who to talk to and how to deal with VCs in these "tunnels" (tunnel vision)

#1. Patent, sell it. (royalty)
- If you have a new product patented and it's secure and saleable, or it can be patented, VC often choose path of least resistance to flip the patent and make a big check. They lose all interest in the future sales potential of the product, and just want to flip this patent for a few million, perhaps with a lifetime royalty attached of about 7%. Tunnel vision in the VC often ensues and all other potential opportunities go out the window in their minds. Fast flip sell and move on to the next score is what happens for many VC minds. For those who have a meager consumer product and have no career mission attachment to it and would have no problem moving on to something else like real estate or some other business and be fine doing something else, this is a good win. Cash in and move along, but for those with a career desire in that line of business, looking at the upside you are selling away, this isn't for them, and many "flipper-VC" won't like it.
#2. Patent, sell it, (royalty) keep rights to be a competitor.
- I haven't seen these deals yet in VC but see them in corporate high tech quite often and they would achieve both for the founder. These should be entertained for career and mission oriented founders. (however I have seen many very foolish deals where founders should have taken the #1 cash and license deal and ran. (ex. new broom technology) You could always do something else once you have the money, time freedom, someone else is doing it and you walk with cash and royalties.
#3. Branding deals. - Sell it or license it (royalty and cash) keep rights to participate or not.
- The same as a patent is done for established branding trademarks etc.
#4. Small business finance - These investments are often like loans, the business can provide a quality valuable livelihood to the founder, perhaps some franchise-able opportunity established, and perhaps have some solid growth potential in the market. (new product or service without much competition, or really much higher quality or value product than the competition that can't be copied easily.) Investments are usually a bridge for orders to be filled. Orders on top of your production maxed out is usually what VC will want here.
#5. Established business scale up - These investments are the "Real Venture Capital" Unfortunately VC is not what most people think and 90% is late stage and "Post-startup" and "Pile-on money" This means that VC wants to see the business is already a success and doesn't need them but can use the money to scale or duplicate the business. (think franchising and getting the money to make locations 2-10) Many VC also want other VC or "lead-investors" to be part of the deal or come in with them, making it even harder for startups to get the financing they need. Then they claim "it's so easy to get money for a good project." But really nothing could be further from the truth and what they define as a good project is basically not even a startup anymore but a finished successful company/small business that is either already profitable, can be flipped after capital is injected and built up, is running, has orders, has prototypes done + orders, patents and basically just free money in a box handed to the VC. etc. There are of course many crazy deals in the Silicon Asylum of pie in the sky virtual economy apps and infotech deals with nearly no chance to ever turn a profit that get funded due to a team with some fat CV's and no clue even how they will monetize. Then the pile on money comes and it's the next unicorn telling investors "We may never even make a profit."
#6. The holy grail of Startup, the TRUE startup investment. CONCEPT funding. Pitch Deck, idea, biz monetization model, business plan, USP and FUND THAT BABY and go build it. This is THE REAL STARTUP. Few Investors are doing this anymore however, and the cult of the day has destroyed really nearly any culture nor will for investors to do this at all anymore. Startup funding has unfortunately morphed into late stage pile on funding absolute no brainer free money gravy train ONLY type investments for the VCs. However there are Angel Syndicates now, Crowdfunding (for the dreaded shameless consumer product marketers), and first round funder VCs. Go for it!
VC Want / Don't Want
VC and Sharks generally want certain things and don't want certain things. Build your models accordingly. VC and sharks are looking for paths of least resistance to success in investments and business and want to find that "explosion point" or create it. They want speed. If they can't get it and fast, and there is risk of stall or collapse, they will move on to other deals. Know your deal type and where it fits before you pitch. Maybe your business isn't ready to pitch yet and needs to be molded first.
*Sharks are different from long term VCs.
*Control VC are different than long term investor VC.

What VC and sharks want and value most:
- A Stack of Orders and maxed capacity of production
- Large sales and profits, established success with current success growing
- A home-run rocketship new product with patents or can be done, with working prototype done. (smart investors will take it, weaker visions will want orders still)
- A hard to copy unique product or service model with low competition.
- Mass market products or unique niches that are hard to enter or compete with.
- Fast flip deals (buy-sell) (patent and sell) (patent and license) (buy and sell to aquirer)
- Huge margins on products 33-65%
- Aquisition cost to get customers is very low
- Easy to get their money out by the new net profits alone without having to sell the business
- Easy to build and sell to an aquirer (major competitor in the space who can't just copy it)
- A service business hard to copy as it has unique products with patents etc or unique skills required that make it hard to compete but still with scale-abilty
- (VC not Sharks) Easy to build and next VC would come in with future round to buy them out at multiple for next scale level because the value is there and easy to see and define. Ex. 200k will enable Proof of concept industry size and next VC will invest an A round of 6-20 Million to scale this to industry asap and clean out the first VC at 400-600k. Sharks are not used to being bought out.

What they don't like:
- Clothing unless very niche market filling without competition
- Anything requiring or Retail focused
- Big footprint
- Capital intensive
- Industry and real economy (agriculture, mining, processing, manufacturing, etc)
- Food and beverage
- Restaurants and franchises
- No orders low sales or no patents
- Anything with medical claims not approved by regulators
- Slight variants to products unless they know this market well specifically
- Creating Branding and marketing awareness (expensive) unless it can mass sell at same time to public on TV quickly on its own
- Too slow to make a return (anything beyond 1 year to profit on investment)
- Selling to governments (too slow, bureaucracy, entrenched corrupt interests etc)
- Tiny niches or seasonal products that aren't really proven yet.
- Deals where there are other investors already involved and they can't get some meaningful control or collateral security plus growth fast and exit-able
- Fast deal sharks generally don't want to build the next Tesla, they wan't to gut and flip. Some do want however but this is few that actually have the vision whatsoever to go from concept to even believe that this can be done let alone then do this execution. "Know your shark", "Know your VC" (if you can that is, these guys are busy and their deals are 99 times out of 100 not in any detail public beyond the who and the money and round)
Lies VC Tell Founders
Learn About The current Toxic Culture in Silicon Valley, China, and VC investment industry, and how it often destroys startups, destroys companies, and can and does so often destroy your investment into their funds.
(section under development)
*some VC and even sharks are straight shooters but since we only hear the pink fluff in very much shark infested waters and never any of the reality, this section is to shed some light on the other side*
SoPro BS
We Invest In people. BS, they invest in who has a super Online Social Profile
Nothing rings the HS - O - Meter like this one. They might as well say "Huge Online Sopro demanded" If they "Invested in people" you would see them investing in Scientists, Machinists, Electrical and Mechanical Inventors and Engineers, Missionaries, Sole Founders, Charity Workers, NGO-to-business persons, Mom and Pop Shop scale ups, but they don't. What is written all over the world everywhere about them? "Don't try to contact them unless someone else has referred you to them, or meet them in a huge mega-event or local to them meeting." All those guys all over the world out doing charity and turning over to business sector to scale bigger or work in undeveloped nations? Since when have you ever seen them fund any of those guys? Horseshit. Change The World? Horseshit, they just want the next time wasting game, gadget, app or VR screen that a million people are gonna buy into like salivating consumer zombies and they can cash in. Half the VC online you see, everyone is expected to be a fb, linkedin, and twit acolyte on their feed hanging on their every word but don't you dare try and message them on there asking for a deal, no no no!! You can only meet them in huge $6,000 a ticket events like Thrush and Web-Lemming Europe or have someone in your Sopro introduce you. What an absolute disaster totally lacking of any vision. These guys are so out of touch with reality they have forgotten what real people relationships look like in the rest of the world let alone do they want to Change it. Anyone should be able to call them up with a great plan and deal and say "Hello I have the real deal here as you want, I built the #1 this or that and hit all the parameters of a quality investment, I'm sending you a deck or what are your guy's parameters etc, let's go." But no, if you don't ping a 100/100 on their Sopro judgement scores and run the arse sniff trail through their acolytes first, forget it, but the total hypocrisy is they don't want you contacting them on Sopro anyway!! LOL. Let's pray the world doesn't change to be like SV, so totally out of touch with the reality of the rest of the world and clueless what real relationships even look like let alone care for the undeveloped world, and that starts with turning off the Sopro and picking up a phone and saying "Hello mate I made the goods, are you in or are you out?" (though the development index of SV would be superb in ....well anywhere)
We Invest In people - HS! They want to be first.
Just today I talked to an "Investor" who claims to be a VC, (zero evidence they ever invested in anything however - a Cambodia problem, but at least they blew 1.3 Million dollars to get a 5 page weebly website and billed it to a government hey that's got to count for something, it didn't count towards a police investigation sadly however) Anyway, this so called VC said the parrot line of "We invest in people" I paused in internal shill reaction then said "great I'm sending my deck to VC in the US" he interrupted "OHH no no no! we want to be the investor we don't want you going to anyone else or anyone else involved we have to be the sole investor, sorry we're not a match" (Toxic Alert Ringing Sound) HS proven of course, how many times have you heard this HS before? Instant total contradiction. In the interest of saving my time I didn't say the facaecious thought on my mind of "Didn't you just say you invest in people boy did that absolute HS vanish fast that's gotta be a record mate, good one!" Truth many VC LOVE to pile on and in fact demand it but many of them also say "Oh hey nice but come back when you have a lead investor" BS You call that investing in people? It's investing in a Lead investor for the pile-on ensuing. Someone who invests in people doesn't give a crap who else is in it, doesn't give a crap if you have 1 shareholder just you or you have 100 and want to give something back to all those little people who supported you along the way, they care about their capital, a great multiple, helping this entrepreneur do something good for the world and great with his life, achieving something positive and exiting the investment and how else they may be able to help his MISSION DRIVEN BUSINESS succeed and achieve more good for the world. THATS caring about people, and most VC couldn't give a shit one way or the other about these kinds of things and the people are last in front of about 1,000 other criterion first and "due diligence" and this even pales in comparison to SoPro scores. VC that invest in people don't care one iota that people don't have a Sopro they care about the merits of the business and that person's will to make it happen do or freaking die.

Can you spot a Phoney? Better figure it out, this is business, plenty comin' and your VCs wont be the last.

About Teams
We Invest In people
This is one of the most common VC lies. Nothing could be more absolute HS from a VC's mouth than this line, and for many reasons. VC's generally couldn't care less about the people they are investing in.

(Now, I have ripped VC totally here as I had seen the worst for about 1.5 years and nothing else, but lately I have seen several VC who are doing a lot of good out there. However this is the critical thinkers' page of the perspective you don't get to hear, so take it for a piece of wisdom and experience. Not all VC are bad. Just learn from this and you'll be the better for it.)

They are not a charity mission, and certainly not any kind of social support organization for founders in for-profit business. The cold hard fact is they are there for One purpose and one purpose alone, to make money, and further their careers. They couldn't care less about who is needed to chop, fire, replace, cut loose, force out, hostile takeover, vote out, buy up and vote out, they want to make money and as much of it as they can. If they think for a second that replacing the original founder with someone who has a fatter CV for the job is a good way to do that, and they usually do, then count on that being their next lines of BS trying to convince you and everyone else that this is the right course of action for the benefit of the company. If VC invested in good people, they would be in churches and temples and charity organizations propping up their little socially beneficial groups, organizations and other causes, not in the game Warren Buffet has called or said about "The pitt of Hell, hold your nose and go to wall street, etc." I have seen no bigger lie than this one from VCs. They may "Invest in THEIR people" ie the ones they know will do what they want, how they want, what they say, fall in line to their demands etc, which is really just investing in their own business, but VC's are not exactly known for their charitable interests I mean let's get real. This is an endless topic but we can stop here. Even for stating this line, VC's will walk from investing in a guy like me for ever speaking it. This isn't about social progress here, this is investing. It's all about the money. We have submitted to "social talk" VC's before and they couldn't care less who it is, as long as it's their location their people their in-club, etc. Perhaps our definition of "investing in people" is very different than what silly valley is talking. We take the good people busting tail to Change The World for real approach. Silly Valley takes the "you sniff our butt and are high in our circle of fb friends well before we ever find you" approach.
We support founders
This one rings the HS-O-meter pretty hard when the very first thing most VC will tell you in the cult of the day is "We don't support sole founders, "only equity-split teams how we determine" and their record of chop and replace founders and anti-founder terms and methods is nothing short of extraordinary. They will support ONLY those founders really doing it their way (or the highway) and if you want to see how fast they really could't care less about founders whatsoever and really it's their business model and their parameters they care about for deals and terms and conditions to achieve their money making goal, just say a few "out of the culture or box of the day" things in regards to operating procedures and terms, and watch how you are cut the hell off in a cold hard flash. I have tested a number of VC in this regard and it is 100% their way or the highway for any VC I have come in contact with (though I have't dealt with any quality VC like Sequoia Jim Goetz etc yet but let's stay high on the maturity and intellect and keep generalizing, here, there are few like a Jim Goetz, and try reaching the guy, it ain't gonna be easy. All VC are not created equally (or rather few choose to behave as such and follow in footsteps of greats)
We care about you the founders
This has been answered above, but again the founder is there in the VC's mind only for one purpose, to perform as stated to get them to their goal, and or to be the saleable flavor of literally that day, of potential aquirer coming along and wanting a certain style of management team or view to sell to them at price, strategy etc. The VC model of the day is not long term sustainable mission-business it is churn and burn baby. Buy, Repackage, fix up, relabel (that often means you, door, and arse) and prep immediately for sale. They couldn't care less if you are gone or hurtin, if they need to "salvage" their investment gains from 10% ringer Blue chip to multiples quickly, your days are numbered baby. They aren't coming over for dinner and hugs or to hang out and be your spiritual coach, they want their money back doubled as many times as your money on tree-pot can provide and if you are shakey at the knees, you are on the chopping block that minute. This is money, not a hospice.
We invest in great teams
This one blew and continues to blow pretty much any BS-o-Meter you could ever hook it up to. Fact is the so called teams they choose usually absolutely suck. They fail 90% of the time, and lose all the money (on average of course and stats vary wildly) but lets get real here if they were such great teams they would never be out of business and yet their performance record shows catastrophic records of failure in majority of the "teams" they choose. Great Startup teams are exceptionally rare, and the thought alone is beyond sense, if you have such great folks, why don't they have any ability to self-fund or raise from their networks? Fact is they aren't that "Great" and I'm not either I'm the first to admit it, and I have a very small ask. Sometimes a great team is a sole founder and a hired team but do they invest in that? No, most VC wouldn't touch it if it was the last startup on earth with the cure for freaking cancer. No Team-up? NO! they don't even ask you what your product is "Sole-founder fintech with great (interrupted) with some absolute BS like "We don't invest in founders who refuse to team-up" or any of the other lines you so commonly hear in their seminars and propaganda campaigns. Great teams are developed over years of working together in a cohesive proper structural environment hierarhcy of process and development, (Team sports baby) not ever slapped-up over a 54 hour startup weekend from total strangers and supposedly that's a great team. Great teams all have one thing in common, Leadership, A captain wearing that C, or taking that snap and calling those audibles, calling the shots and driving it home with his OCD passion, every great team in sports history has had that, and a band of brothers paid to go to war and that bought into or were beaten in training into a mission of greatness beyond themselves, or a decision was made by the coach to cut them from that team for someone who would get in there and freaking fight for his brothers lives like as if they mattered. That's a great team, and the average VC is preaching hard and steady against going anywhere near those kinds of people with your life.
We care about our founders, teams, etc
LOL omg spare me the susie-tears here. That's all nice and frilly in a very pink sort of way but they couldn't care less. If something isn't working because someone has their feelings hurt, they will cut you like QB with a secret spinal degeneration. Their "care" can be evidenced in their terms from the getgo, their willingness to promote the Underdogs in business (which they don't) their desire to work with what works for the founder's needs desires or direction and vision to build what he needs to how he needs to (which is rare for stand-by) VCs to not act like they know better than you do about your business and what is needed and direction and vision in the board and otherwise. Count on a lot of friction coming from the VC's in your plan, unless you are willing to just do whatever it is they want and have (a job in their company, not your company) kind of attitude and especially words from your mouth. If I could count the absolute BS I have seen VC's do to founders and the number of people with VC knives sticking out of their backs, I would probably have the second CB commercial although a much more sellacious media version due to all the VCs branding you arch enemy #1 should anyone do so. This is just not reality, especially as they speak remember "we see hundreds of decks a week, and we only consider maybe 2-3%" Why the hell would you believe they care about the founders and teams? Did anyone ever challenge them on this and what that means? I barely ever saw it dared. They look for models, what is wanted in the market, not to take care of anyone. Keep the conversations business, they aren't exactly flying you over for Christmas dinner with remember the other 100 Startups they flung cash at. Just know what it is, do your job, don't listen to the lies, hold your nose, go to absolute town on your business plan night and day, and grind out your success if need be. No hard feelings, the world is a tough place, no one said life is easy, and this is the business world baby, this is prime time. Strap up your boots, slap yourself in the face, blow the snot out of your nose, and get in there and lift for your life.
We care about your success
They care about MONEY. That's it. They want just like you their own success. They want you to achieve THEIR GOAL of making them a huge return as fast as possible or max time premium and that's it, period. They couldn't care less if it was you, Clark Swooney, or Lars Tankenship, if someone else is better to make the object look better for max time premium aquisition, you are out and they are in. It's not your success they care about, though they would rather not change ideally, but most VC immediately are thinking (max time premium aquisition flash and hype sale best team branded package etc or strip and sell or some other money maker) (Long term funds like 5 year or 10 year that dump and run may or may not have a different focus). They care about all the "founders and teammates" successes in their portfolio, but this is a very general statement, ultimately they don't care who it is in there, as long as the job gets done. It's as impersonal as an NFL football team. The owners will cut you silly if there is anyone they think is better, and usually unless you are already on a hall of famer pace, there always is someone "better" in the eyes of many, and such will be the case to their Venture partners, investors, potential aquirers, and boards. Don't listen to the BS, just protect yourself from it best you can, know what you are up against, and get your arse to work.
The team model is better than the sole founder consolidated leadership model
This is one of the most common VC lies and of course nothing could be further from the truth. This is so outlandishly total HS that I'm dedicating an entire page on my website to it. Have a read if you would like. And this is one of the paths for VC to cheat you more than any other and is no doubt why so many do it. Players play and hustlers hustle and the VC game like many investments of buy and sell, is a hustle. Let's face it these guys aren't usually your value investor Warren Buffet buy and hold types here, these are hustlers with an exit strategy and a definitive time frame one at that. Most VC funds have a 10 year close target to exit all positions by, and many have 3 or 5 year targets, and even many in China and thus Asia are on a flip basis looking to trade within 6-18 months. There is one thing that the VC cult of the day seems to hate more than anything else in a startup, and that's the Mission-oriented hardcore OCD business leader hell bent on success or death bleed for my company kind of intention and in control of their business undiluted. This should be the panacea find for all investors as opposed to the typical Me-lennials who want to ramp-up and run with a bag of cash early and get onto the next thing, with no real longevity, no real passion (but all claiming it of course) no emotional nor family skin in the game, no business-personal identity investment, and without that do or die football coach type of grit that brings home the consistent victories and aggressive style of dominance in sports or in business. But VC-com is against this kind of founder, why? because it's a lot harder for them to get their unfair share from this guy, and or kick his butt out once they want to change his business. They are reliant on this guy making it and if he doesn't, they can't manipulate the company. But the Championship hard fact is; Sole founders, especially mission driven based founders by far outperform the slap-up team model in nearly every metric but for the unicorn category, and that merely has to do with the sheer mass of funds that VC blows up the unicorns arses post-success in comparison. Mission driven sole founders have outperformed the team model and done it with far less cash, far fewer deals, and in the face of non-stop VC negative rhetoric and cult propaganda not to support these guys.
About Notes and Shares
Convertible notes are too founder friendly
This is the most common VC lie spoken about notes. Fact is they are just easier to get the deal in without regulations and legals. Firstly they save on legal costs and hassles, letting the startup get access to capital earlier and cheaper, which is good for growth and it's survivability and the VC performance. Also the founder usually gives an additional 20% discount at conversion (additional free money for the VC) and since it's a note it has superior claim against assets to shares. So considering this you would expect a VC to say yeah let's do it and I'll convert later, we can save money now and consolidate the offerings but hell no. VCs begin lying about this why? Because it allows the founder to not be diluted yet, giving them ability to have more of the shares for longer and the VC less. They want to get their unfair share remember, and many are as greedy as anyone you can find in humanity. They act to get more shares for themselves earlier and cheaper, instead of what is actually right for the benefit of the founder and his team and the longevity and scalability of the founder. Right away they are making a statement against the founder "it's too founder friendly" because gee, they sure wouldn't want to be too friendly to the founder now would they? so much for all that phoney mushy care about the founder and his success and team and etc (IF they did that), that sure didn't take long to be gone now did it? The fact is, what is best for the founder's success is better for the success of the VC investment survival, but that might mean "Oh NO! the dreaded lessening of the unfair share VC no-dilution cut gravy train" to cutting as many massive rocketship multiples as can possibly be done, at all costs usually to the founder, his team, business, model, vision, mission, and the investor's stability in returns and value.
Protection clauses for VCs protect the investors of the fund and the VC
This is a hit and miss statement. Often this ends up annihilating the startup all on its own. One of the most Morale destructive killers in the game today, VCs load up with hands rubbing together in evil grin or just oblivion to what the hell they are doing, putting in clauses that absolutely boot-stomp the founders, company, and teams at the worst possible time, when they are down. All startups hit roadblocks of differing degrees, and you would think with all this BS from VCs about caring for your success, caring the team and founders and so called great teams etc, that they would then inject more cash or preferential lending and finance in those low times, but no, they want to strip even more shares from the founder and teams in those times on the cheap, no different than foreclosure man coming to take all the equity in your house when the payment based interest rates went up on your house instead of helping you with low interest cash to buy another house from the bank when someone else lost it already. The VC is in it for themselves. Countless startups have been imploded by the VC by these clauses being added, when there is a "down-round" of finance due to some challenge, and the VC just rips more share instead of "caring" leaving the founders and teams gutted and really no point for them to be in there anyway, best for them to move on and start over. And who picks up the loss? The investors of the VC. It is absolutely shocking how common this has been that VC are willing to full zero their investments in stubbornness and anti-founder and team behavior, insistent on getting that founder for free or over the barrel or nothing. How these kinds of clauses persist is really shocking, with really zero alternative creativity being forwarded in all of financial realms possibilities, and that again shows how they don't care about anything really other than their way or your arse out the door even with zero and a loss on their books. For the record I have an inversion clause on my ask currently, where I offer 100% shares to the VC from the beginning where they invert to proper terms once we hit our performance goal. There are restrictions on control, but they have asset security in case I die or fail. In finance there are many ways to slice a cake, but most VC won't even discuss it, playing power broker instead.
About Dilutions
Every Teammate should get an equal split of shares
Since when did company formation turn so social-communist? And since when did the profit-motive become so social-communist? Though this isn't surprising coming from silicon valley, perhaps one of the most social-communist places in human history, what is surprising is the radical ideaology religeon style fighting for and campaigning for this nonsense. This is mostly done to dilute the founder, and a policy of "divide and conquer" VC can get more possibility to control, manipulate, steer and "actively manage" their investments this way, as if a single founder doesn't have a mass majority, he is pretty much become and employee of his corporation and it's not his company any more but rather a social project. He truely has little authority in Startup VC land in comparison to publicly listed corporations in this kind of format and this won't return unless really he gets post IPO or is really smashing some serious home runs in metrics. Fact is the other founder of a two person team won't even be there after 1 year for the vast majority of startups, and the VCs know that but most founders don't. This is a way they get in and hustle you, you won't have any money at that time but they sure will, and guess who will be buying up that teammate's shares? You? LOL of course not, the VC, for of course, pennies on the dollar. Also they want the additional shares and votes and control so they can of course control you, "their company, their asset" even more, and if you have a peep to say about it....well, you know probably your social-communist project just because their communist-dictatorship, so no one ever makes a peep, and who would? with the VC-com so dead propagandist against anything else, do Founders really have a choice to be campaigners for change in VC land? when 100 decks a week hit VC desks? Probably you have to be one hell of a radical or balls like steel to even speak a word or just crazy, call me crazy, I'll even sign up for radical. If "teammates" want big share splits, they should have a major part in not only the original ides, but business models, business planning, vision development, and mission development, identity development, and the obsessive relentless work that took that startup to this point and will continue doing so in same exact or greater vigor than the original founder or frankly there is no way in hell there should be any words about some split ownership. When they bleed on the lines with the boys for a whole season they can hold up that trophy with the rest of the team, if they want a huge signing bonus at the beginning without doing anything, at the Qb's expense to fork over, in a startup not a pro-team, you don't just say no, you hand him a towel and his locker key and say come win some games first son. VC want to dilute the founders and their control that's all there is to it. There are plenty of ways to make incentive based pay that doesn't destroy the other parts of success or bring risk to the model and they can see that in every part of corporate business but do they use these ways? Hell no! They insist on these kinds of methods and it's plain as day why through all their tired BS.
Pools for stock options and executive bonus should be made and set aside first in the beginning
This is again a common strategy lie and it achieves one thing, usually 15% of votes cast aside from the founder, bringing founder from 80-20 down to 65-20-15 then they get him split with 2-4 other guys down to 25-45-20-15 and as soon as just half those teammates side with the VC, they have the company however they want it. If one leaves (and they know nearly all will anyway) now they have 30-25-25-15 and they got you with one teammate vote for majority. There is absolutely ZERO need to set aside executive bonuses at the beginning of a company and no major companies in business has that done up front they set some aside for anticipated hirings in future and then set it up when those people come in. But to do so in the beginning of a startup when the startup needs every dollar of finance and capital that it can get it's hands on just to reserve and lock away those resources from the founder and thus the business is not only nonsensical but plainly obvious. There is no good reason for it and the timing could not be worse in nearly any of business decisions. A startup is go hard with every possible resource or die, now they are talking sustainability actions when they have kick you when your down and dilution actions all over the place wherever they can put them in? Omg please spare us the insults to human intelligencia. First get to profit, all hands on deck, every dollar front and center, nothing hidden behind for someone else's insanity rainy day when we don't even know their names yet, everything in the garage and living room up for sale, and go hard with every dollar, if that doens't make sense to you, your sense is broken. VC lie score 10 out of 10
The only way to secure my investment is to have a big share split
Shock awe and speechlessness is all I can react to when hear this crap. I just find myself wishing I had a cigar to suck back on and a toothpick, why both I don't know. There are so many ways to secure investments and if these guys ....supposedly some sign of intelligencia in investment....(can I even say that?) don't know the basics, God help humanity. No no no, they don't want escrows nor financial controls just unreasonable share split, no no no they don't honor contracts nor lawyers nor accountant oversight invoice order procurement and cash control no no no just unreasonable priced share splits at low valuations, reversion contracts? no no no just unreasonably and get this....permenant, undilutable at that, share splits hahaha, oh wow how creative of you and flexible and concerned with your "security" apparantly every posible scenario of life isn't possible to make most VC's feel any kind of security unless it's taking more unfair share forever even if they have more true security in beginning, medium term, long term, asset base, claims, finances, accounting and transparancy, no no no all is nothing, but the one that causes them much more risk they want, which is founder dilution.
VC dilution isn't good for investors
This is another common lie and shows you immediately how crooked the VC is and how professional or rather not, if it is spoken. Everything in finance and contracts of course depends, and if a VC is hard on anything they are either a total amateur, arrogant and inflexible as hell, or a hustler. (good example watch how fluidly Shark tank investors can move and change in some deals on whims or what other sharks might see or value) When you invest into a startup dilution really has zero bearing on the performance of the investment and the life of the startup itself but for the fact that it is a tool like any other to help the startup succeed. If you can use dilution to save the life of the founder his team and thus the startup, do it or you lose all your money, period. (I can hear the Lying crooked VCs in the pack saying "or replace the founder") A quality return is what you are concerned with when you invest, and not losing money. "return doesn't matter" if at the end of the day the principle is wiped out. Warren Buffet says sometimes the best investments I make are those I don't make. If VC would loosen their strings on dilution, and pay founders out of their share, allowing at same time for another round to be taken in to cash up the startup to overcome competition and grow and reinvest and hire good people and win those contracts etc, not only is the startup still alive, the founder still kicking it hard, but they just grew their asset base. Tell this to a VC they will usually squirm and squeam and BS all day with more lies lighting up that detector than the FBI interrogators eyeballs in the congress hall. Dilution is a tool and if used smartly can help everyone. If the VC gets a solid return and exit, their dilution shouldn't matter, and ultimately this tool could be used a number of ways to benefit the startup, but try convincing the greedy VC of this, no, they want linear all the way and any dilution to come only at the expense of the team and founder, startup and company, and last to come from them. So much for caring about that success, those people, those teams etc, the truth is out folks. This is a one way roll the dice for multiples on cheap as you can get as much shares and protect that share and increase it at any chance for cheap or free, that's the VC hustle, (and trying to find those "sure wins" at cheap to free at expense of the founders) And if it's winning, throw massive amounts of cash behind it in subsequent rounds, and still call it a startup when it's a billion dollar we don't know. (some VC go and sell revenue or sell to other investors also to get bigger subsequent rounds though and this does have additional value.....ahh, time to make a price-in for VC performance. All new Engineering by AOE.)

Fact is dilution can be used to make investments safer for VC. This can be done at any stage of the startup progression. Contracts can be written any number of ways. Kevin Oleary (I like to use shark tank analogies) has often done deals that take a big percentage early with a royalty until he gets his money back and then he is in for the proper small percentage ride afterward with of course, ZERO risk from that point forward and possibly zero risk from getgo depending on the company, collateral, deal, and what he decides to go and do for that investment. Oleary has done some good deals this way, and has a hell of a lot to offer in the network side but he bites a lot harder than Sili-V investors.
Every Investment needs to have a "No Dilution Clause"
if a VC says this, just change the topic to startup events and community and network or something cause behind this one usually lurks probably every other trap, cheat, and anti-founder clause you could ever possibly find. Give it a second chance and find out more just in that one in a million event but (shakes the head) It's almost like some witch knocked these blokes on the forehead with a wand and they are under a spell. No tools, no creativity, no financial power, no engineering, no, it's just a linear out of the box one size fits all sort and there is no value here mate. Every cult rhetoric spoken like as if they picked up a manual for $9.99 on how to make a VC and are just sticking with it full guns no matter what and calling that "due diligence" along with some social media searches and gossip sessions who knows what about you. If a VC isn't fully willing to be diluted above and beyond what the founder is (in reason of course as all things are) then they are just a vanilla VC. Have your oversized yawn in the toilet, pick your forehead off that wall above front of the urinal, and see who they know. These guys are just not innovative enough for the ever changing landscape of business, technology, finance, investment, and markets. Not every VC can engineer a 34 Billion Snap IPO bleeding like a pig shot from a thousand directions to be worth this. Most VC won't be worth a non-dilutable position, and they should be creative enough to engineer something that brings more benefits than mindless linear-isms. They should be more than happy to be diluted after point of when they can exit with great return or if it helps the business get there, or gets that next round that does so or makes the business stronger, more marketable, or puts them in a better overall business position. Many ways to slice that financial cake that works the win win and if they are inflexible as a tyrant slaver just looking to rip as much as they can, walk because this is no way to build a successful business when you are chained to a wall by some greedy nutcase.
I don't want to be diluted, dilution is terrible
This is HS and the mark of a greedy pig VC or a brand new one. There is NOTHING wrong with dilution and nothing wrong with inverted dilution going to the founder either. ("What did he just say?") Yes that's right! The goal and success of a VC is to invest, earn a great x like 2-5 in a short period, and then get the hell out. Job done, WIN column. But they want to have their cake and eat it and yours too and everyone else's too, and their greed screws up their own mission which is and I quote "Earn a great return for their investors, and that mean invest, get a great x like 2-5x in a short period, and then get the hell out." But in their greed they screw it up for themselves and you too, and cry and whine and tantrum about their dilutions. You can still contractually guarantee them any x you want with dilution. You can make side obligations. You can make debt notes in addition to the shares, you can literally do anything. Remember how they call wall street a stack of paper? Well...use some. Diluting the hell out of VC merely so the founder can do any number of things like keep control, get all the shares back later, or even just because he wants to, will have no bearing on the financial obligations he or the company has to the VC with a side contract for a certain x payment. In fact litigation could do a lot more damage to the company on this than an investor holding more shares and whining and selling them. The VC doesn't have much different in claim, but with this method they can help the founder and his goals and the goals of the company. VC whine too much about dilution trying to rip an unfair share. Any VC not willing to be creative and excersize their grey matter in a very smart engineering manner, I may not necessarily accept them, and really probably would not unless the first round. I want my investors out. I'm willing to pay them large x, and get out. If you are too, there should be no reason they should not want to exit. If their plan is to stay in for 20 years trying to eat up billions for free or pennies on the dollar and never exit and not contribute significantly more than their measly cash throw, forget it pick another, if you can.
About Founder Comp
Founders shouldn't have vesting beginning until a year from date of funds injection
This is one of the most common VC copouts leaving founders poor as dirt grinding on air and not even a dollar for food (unless they have a small salary in the startup) and they are stuck building for another year on top of the years they have already been building and toiling, before they ever see a dollar out of any deals in their company. Usually they also have clauses where they can be removed from the company also, and actually get zero because they weren't there at vesting time. Wow imagine that, founders who built it all and forced out and get absolutely NOTHING. It happens and has happened a lot. Any VC claiming it never happens is an outright liar stay the hell away from people like that seriously run for your life, it happens. If they won't protect you from it know what you got in this VC, you might as well be shaking hands with the man in red down below himself because that's exactly how he does business no difference whatsoever. Founders should see some pay if there is any valuation and fundraising at least something some reward for getting it this far. It doesn't need to be huge and shouldn't be but there should be some morale builder and reward and some booster to keep the guy in the fight and moving forward. Not enough he is going to run but something to cover the debt side of what went in or at least keep the bugger floating and feeling like this is worth it and not just more years of hellgrind while VC gets it all with total liquidity. No possibility of any income but for a tinky salary for more years? it's insanity its like a slave camp not a business I certainly would want my founders well paid and fresh and morally pumped up and gunning it not watching every one of their peers in the corporate good life while he cant even afford to go to a movie or pay back his ex-gf for the website programmer money or something meanwhile he is running a growing company with 20 jobs and life coach as a startup founder. Many VCs are merciless with founders and even you can see a fair bit of video online of these kinds of negotiations, though most are closed doors and I have heard some brutal stories. You gotta fight for some vesting and pay, after all, the VC isn't even going to be there for the exit, they will likely be gone from their VC firm to another one by the time there is an exit anyway a lot of these guys flip like pancakes and the industry is growing and becoming even more dynamic as the days go on.
Founders should have vesting how VC's say when VC's can sell and run any moment.
What is fair in any kind of equal partnership if the VC demanded that is similar vesting with allowances for the VC security of funds (and usually they do everything they can to get equal and more in their long term planning beginning with statement "this is our company this isn't your company" propaganda) which is totally contrary to both stock market shares investing and also the amount of time they actually spend in a startup (maybe an hour a month or a few more in conference calls etc) and then state it's their company as if they are sacrificing anything significant for it (like your life). The main point is the return of VC capital, and a healthy return. After that vesting shouldn't matter. Should the capital be returned and at a strong return, vesting should be 100% at that given day, not restricted to some long time frame etc. As long as the VC has adequate exit possibility at great return and return of capital, there should be no restrictions on the Founders whatsoever just like there are not for the VC. If the VC doesn't see it this way, he is speaking contrary to what nearly every executive has in the world today (exclude the golden handcuffs companies) but then again those have incredibly high paid salary Leaders Unlike Startups who are generally poorly paid if paid at all. (fb is not a startup nor any other large profitable or 50 million asset company, lets keep the definitions proper) If a VC can exit with solid return, the founder should also have full vesting and be able to do whatever the hell he wants to with his shares, or dilution of the VC, or use and exploit any other tool to the imagination to be able to grow his company if he so wants, or get the hell out for that matter if they wanted to.
We have a great network that can provide great value to the Startup
This can be true or false. So what is a great network?
1. They will Invest, and refer you to many more investors, financiers, at great terms, and advisors
2. They give you debt finance and introduce others who will also
3. They help you with customers and gaining and selling large accounts
4. They help you actively cross sell and contact to make customers out of their network and clients
- The fact is though this often doesn't happen. Sometimes it does, but every VC usually claims they have a good network and few ever claimed they don't. Usually it's horse dung unless this company is a great VC, then usually it will be true. Check the record, if they don't have one, and can't name well the names and deals and types and show the actual network with names logos and contacts, it's usually BS. China is FULL of fakes and frauds claiming this, thousands of "Fake network sellers" which aren't VC at all. If you want a good representation of what a good VC does for his investments, watch shark tank and see the deals that some of the sharks set up post funding. Now that's a good VC, selling and driving revenue in his startups, getting contracts and revenue gain asap.
About Valuations
We need to stick to the antiquated one size fits all Cap table system
As a financial engineer, this makes my eyes bug out from the total lack of sense, innovation, and creativity in Startup funding. Using a one size fits all antiquated cap table strategy is nothing short of failed and broken. For all the possible strategies in deal structures to meet the challenges companies face, and ways to change things along the road to create advantages for the company and it's founders and ultimately that means success for the investors, team, and society, it sure is amazing how this cap table only method is stuck to. Why? because it gives all the advantages and money to the VCs at great expense to the founders, companies, and staff. Recently in the Snap IPO, Lightspeed investments made Billions off merely a $450,000 investment and managed to control everything superceding other investor's rights all the way through the IPO. Now, investors should get a great return on their investments, and I am not a fan of the snap business model nor investment like many others, but do they deserve 1,000x their money? Maybe, maybe not. I am not privy to what kind of work they actually did to make this happen. Maybe they drove it all and deserve it, maybe not. Regardless a one way cap table of pre-money invested, then post money sold values, and stuck to, doesn't make sense.

For example, lets say one company like a typical Silicon infotech company doesn't really have a hope in hell of going IPO for 5 years (as usual), as they slap together 3-6 strangers with nice fat looking corporate america CV's or silicon CV's or "social profile superstars" and like so many times we see they don't have the product down, the market fit isn't there yet, the engineering is still being done, the monetization is merely a who knows dream for future years, the business plan is still a work for years later, the marketing plan isn't set yet, they are burning cash like crazy and planning to go round to round "until this so called all star team figures it out one day." and as we so often see, they get tens of millions. They get the normal cap table rate. (this makes sense, maybe give em zero and give the money to mom and pop industry startup to expand makes more sense, your baseline would step up at least). Now, compare this to a Startup with for example a sole founder mission oriented family business that is heading direct to IPO, has everything planned and done and done, and needs one round max to go to IPO in 12-15 months. Should that company be on the normal cap table or should they be priced at the high end of stock market investments at IPO stage? You tell me? Look at the IPO valuations with snap in mind with zero profit and bleeding like a pig stuck by the entire tribe of hunters. If you have a quick to profit model, they should not be on the same cap table as a basic rule, and opening up the toolbox at the very least should be an option. Fact is to most VC it is not an option and they are out. This is how they rip more unfair free money from founders and companies. Many of them aim to use this table because the more established or likely a company will be successful and the more they have it planned out and ready to profit or close to profit, the more they can rip for free. Anyone not going along with this is just out and that's it. Of course smart dealmakers and investors will look at all options and VC like this likely exist but it's not the majority unless they are very creative thinkers and high quality investors.

The interest for VC should be in setting up success for the company and founders, but it's usually only setting up mega home runs for them and anything but is called "too founder friendly". However the right cap table structures and creativity for the stage of the company and track path it's on will ensure both great returns for the VC investors and not reduce the founders and company down to mere mcdonalds employees in the process, running for the hills to the next round of the competing startup or to make the next copy-startup in the process. This further reduces the risk for VC and treats the founders of proper business models with the Real kind of "we invest in people and we care about the world" as opposed to the rip as much as can shark on a wounded fish take advantage deals and models seen so often.

There is an incredible amount of cap table creativity not done and usually when done not disclosed as these are "trade secrets" of how VC companies rip off startups and if they do a generous deal once they may also not want to have everyone calling due to, as thinking by some VC is that it may limit their returns or cause founders to negotiate harder.
VC investments should be based on pre-money not post money
This is a common VC lie and is generally senseless. The fact is the company once they invest will be a post money company and it's only a pre-money company if they don't do anything. The second it's funded it's a post money valuation and this is the reality of every last deal. On this point alone you can show that in reality every deal should be looked at on a post money basis not a pre-money basis and the deal done accordingly. But VC sharks do pre-money values on a simple cap to bite off a huge chunk of extra skin for free that they really shouldn't have and don't deserve.

Example. Industryco 009 has 56k in sales, 20k in profits, and 300k in equipment assets. Let's say they will be given by Shark VC a pre-money value of traditionally 50k-200k in value and use a simple cap table. VC argues that if they put in 100k they should get 50% because the company is only worth 200k but the minute they put the 100k in the company has 300k in assets and can liquidate all at auction and pay back the investor. In reality the investor should be in for no more than 30% in this example and even less due the companies' profitability. (depending on other factors)

Now, if the company has novel tech, or a model that can be instantly scaled with capital (very typical in industry startups but sili-cult valley is often blind to in their infotech craze) then the % to the VC should drop accordingly, and significantly, if IPO is imminent then again, and orders quickly obtained post money? again, engineering the cap table to embolden the company into very attractive A and B round gains? again the VC should do it willfully but will they? That's how you determine a shark gamer or an honest invest and build people VC.

You can't or shouldn't consider the IPO and stock market value when doing VC investment valuation now.
Of course you should consider it. If the company is going IPO soon, (not a dream but reality) then of course PRE-IPO values should be in play and used at face value or deductions for items. If the company is solid and can go to IPO as a course of this investment round, that PRE-IPO valuation should be given and cap tables based on that or even somewhere in the IPO then discounted range. They are investing for it to be built and it will be, so the price should of course consider it no less than the final price of the construction cost of the building versus the cost sold to the public once it's finished in 3-6 months build time post money in a home construction investment.
Valuations should be very different than stock market investments
Of course for something that has no hope yet of going IPO this will be correct, but for those near to IPO or preparing to, the sale and momentum values escalate rapidly and that must be taken into account when investing into these kinds of companies especially when solid. Though founders want their investors to make money and smart ones will always price in a good return for their investors to thank them, these fast rising multiples need to be considered by VC (ohh they arrre, they arre they just don't want YOU to think about it)
Using discounted cash flow is an effective metric for valuation
Usually startups have no cash flow or very limited or are losing huge amounts of money anyway so this doesn't really apply in many scenarios. But for those that do or the analysis of future cash flows based on scaled up industrials etc, using discounted cash flows is merely one metric but contradicts the entire investment purpose. You are investing for GROWTH not to stay in the same place. While some sharks use current day value of a business pre-money to rip off founders, proper valuations are post money and somewhere at least valuing the business with some growth from that they will accomplish (as they will get it from any investor not just them) and then give extra to the founders so they will stay and can not be diluted to the point of walking away when other rounds are needed. On go the adjustments to win on the investment.
About VC Value
VCs provide exceptional value to the startup
This depends on the VC. Most VCs will claim this and few are honest like a Barb or Kevin Harrington from Sharktank backing away because they just don't have anything to offer other than money. (you have watched shark tank haven't you???) Some truely DO have a lot to offer in advice or contacts and they will go and sell contracts to customers or get you in front of huge decision makers that will place massive orders or will refer other investors and sell the investment to others and bring in bigger valuations and more rounds and hype your investment to others. But unfortunately many VC just aren't like this and don't offer much and can't be believed on their endless bragging quests on a stage somewhere. Usually they are stubborn as hell too and sometimes will bring you deals that don't work, are priced wrong, bring more destructive sharks in behind them, and all kinds of other problems. And some think all startups fail only on the basis of the business lol oh naive. Having one of the shark tank sharks which take very significant pro-active steps to rocketship their investments asap post-money is the ideal but not the norm. They demand a massive price however and for those who are more seasoned their price won't be very attractive unless you have zero mission or attachment to that business as a long term career path.
We are better than other VC that's why you should choose us
Nearly every VC says this and a large survey needs to be conducted with backup evidence of very significant value to assess this unless can be very visibly seen in public how they helped their startups (shark tank etc) But in all reality there isn't much different from VC to VC until you get into the high upper echelon of Global VC like a 500 startups or a Sequoia or a DFJ or a Khosla or something of the sort. These companies have some serious guns to fire for their startups no question about it. So do the sharks on shark tank.
We are better than other VCs
VCs are nearly all the same, but some are clearly worse than others, even much worse. Unless you are dealing with a real gamechanger like a Jim Goetz at Sequoia or someone like that, youwill be hard pressed to find much different than the standard models. Top global VC, middle of the road "culters" and then the crooked players pack. There isn't much else. What makes them better? This is a whole another topic however let's just consider two for this item, #1. Great terms ie Cheap money, #2, an absolutely awesome valuation giving you better subsequent rounds, #3 an absolute slew of promoted meetings, invites and referrals to itchy to invest people and investors, combined with killer terms and a great valuation and low dilution for you, #4 an absolute barrage of advice and help from VC HQ land without rocking your power boat or creating any kind of problems for your direction and vision, mission, and where you want to take your baby and future and life mission business.
About VC control
This isn't Your company, this is "our company"
These kinds of VC are toxic in attitude and should be avoided at all costs. Not only do they not care about you, they are vehemently against the mission founders business model and propagandize strongly that somehow it is a bad model. Their lies and angry vitriole from hell could not be further from the truth, and the facts are that "second founder's" are gone by end of first year in 90% of startups and they know it. Even fewer of these marriages, especially the forced ones have lasting power beyond the second year, and the results are worse over time. Crunchbase however reports that mission-oriented founders are not only as successful if not more than the slap-up team models, but that they achieve such on 10x less money and 20 times fewer deals. Imagine that! The fact is they don't care about your company, they are in it short term, to get in, and get the hell out at max time value profit, they have zero interest in your company behind TVM. They are a TEMPORARY Investor and nothing more. (some exceptions exist, as in all things but let's not be naive here) These guys seem very bent, angry, and hateful in their hard propaganda against mission oriented founders. Even that SHARK Oleary from the Tank is 100x more mission founder friendly than these guys (unless a big fat juicy patent he can sell off tomorrow that is of course being the path of least resistance guy he is he can't stand it when easy money is there to be turned and a mission oriented founder wants this business as a life.
The original mission founder is not the right person for the CEO role
As we have seen, too young (Zuck) too old (Jobs) too wierd (Dorsey) too crazy (Insert any real engineer) too Adhd (JetBlue, Azule) too creative (insert any mission founder) too tourettes syndrome (Dave Mcclure) and it has always been a success. The original founder is nearly ALWAYS the right person, UNLESS he is saying "I want help because I don't know how to run this" and then it's best to get him that help but this is a very admirable quality that should be rewarded and valued as that guy will tell you his weaknesses and abilities honestly straight up and that's a great teammate especially if has taken a company far to a point.
VCs can provide great advice to you and should have controlling seats on boards
While many VC can indeed provide great advice that's for certain, the value of this can diminish over time as you learn all this, (not to take away credit from the teachers who put it in your minds in the first place) but usually a lot of VC just don't even go to board meetings and rarely touch a startup and have no place even asking for a board seat let alone any control. Once they have exited their initial investment capital there is further point to make that they should be out of control totally and no different than a C class stock investor on the market. Boards are totally overrated according to many top VC brave enough to be real changemakers like a Khosla etc who calls "total HS" on this claim by other VCs. He states he can't even stand to see anymore people who have no place giving advice on this business talking about it and trying to hold control on boards. He still gives advice when needed but he doesn't go to board meetings. He also states he has never voted against a founder. I would love to have a Khosla on my board or a Carl Icahn etc but when you have some jerk who just threw money and wants to run your company he isn't spending any time in that can drive some founders to just say to hell with this and sell out and walk on onto a re-start. Nice collapse of your investment guys way to go with the ego-trips to disaster. Yes this happens.
About IP issues
You need to give us your patent information first
This is one of the most common VC lies in some markets like China which is also known to be the "Global IP thief of world history". Fact is no one has any right to anyone else's IP of any kind, or patent information but for the patent or IP holder themselves. A legitimate honest businessperson will always discuss deals and relationship structure and business before he would ever need to see or check any IP. If there was no IP it could just be applied for immediately after or as part or contingent to a deal with money in escrow as well and any legitimate investor would have no hesitation to do it. Fraudulent unprofessional sharks will be easily evidenced by them deviating from this path of credibility and honest process. This fraud method is unfortunately the standard operating procedure in places like China. If people don't respect IP and business information and want you to throw it like cheap pizza paper to every tom dick and harry claiming he is a VC just because it's on his $1 for a box of 100 business cards, you know these guys are shady as an oak tree at 10pm.
The first issue is to get your IP handled
IP protection is important that can be true, however business success is in no way related to IP as any kind of default and everyone knows that. If you are handing an easily copyable product to every tom dick and harry then you may run into an issue but if you have a formula hard to copy and with limited customers in limited markets and exposure that is a different story altogether. The first order of business is the business model, product market fit and demand, some company structure plan, branding, and then it goes on to other topics like orders or investment. You could have IP out the ears but if you have no one to invest in it ready to go your product will collect dust on a shelf. Some will claim IP is always saleable but there are thousands of patents around the world for novel technologies that have never seen a dime in investment nearly everyone knows this.
Startups need patents to be successful, go to market, or secure their IP
This is one of the most common VC lies about IP. These kinds of statements will immediately tell you that this VC doesn't know anything whatsoever about IP issues nor protections, lawsuits and laws whatsoever. If you hear this, go DING! inside your head and know they are the last person on earth you should be discussing anything IP related with. All over the world we can see patentless businesses making HUGE windfall profits, fortune 500 companies without patents, tech companies open sourcing their patents, the majority of companies copying others with not only not patents but not even so much as a single original idea, franchises and spin offs, and endless do it yourself style trainers, coaches, mentors and consultants preaching a model of effective practices in business beating the others without a single thought in their minds nor speech about patents of any kind. Apparantly and you better ring in, these VC not only know zero about IP issues, but they also make the statement that they know absolutely zero about the world of business around them. They are so closed minded and switched off to what they are saying and relating to the world around them that it has to be an obvious concern to a founder. If they fight for this, just walk away, they are too negative a thinker. Any product as well the investor could put in enough to get that patent as well so they don't really have a candle to stand on if they don't know this. China of all places doesn't care if you have 10 patents they are still going to do all they can to steal whatever you have and they all state this but then will complain about having one and if you don't they wouldn't invest. Talk about a total contradiction. If you do have a patent this becomes a potentially marketable "product" in itself and can substantiate value from a marketing perspective if you are trying to license and sell the IP. However trade secret is still a choice of many large corporations today instead of wading into the corrupt feeding frenzy where even the IP lawyers are so often thieves of IP.
About VC Terms Dating
We need to see your whole business plan first before we can decide what the terms will be
This is one of the most common VC lies, especially in China. "BP or no talking" the fact is, every VC has their terms already spelled out in advance as their own operating procedure. "We do this type of deals" is not spoken as is just a game played of hiding the cards to be able to then rip as much as you can after sizing up the buyer coming in the door no different than a cheap stinking used car salesman with no price asking "what's your budget?" If they won't tell you what kind of deals they have and have recently done and done in that size and similarity range, go somewhere else as these people are crooked dishonest players not even ethical enough to be up front with their startup founders and talk like adults. Every investment manager has set parameters before they even meet you. You think a VC fund is going to let one partner decide on each deal what they are going to have as procedural investment parameters for all their investors? Give us a break, they are just insulting you and the world as a whole, and revealing they are as crooked as chinese made "original" Translation "We haven't decided how much of your future, life, and company we think we can strip out of you yet, send us everything and we will start to do so beginning from the unreasonably high end and let's see how you negotiate." Sharks like shark tank may negotiate something but as you can see it's usually a rip and burn style deal that is great for the sell and get out style founders tossing IP as a sale or dumping half the equity to get an Oleary selling licenses or something that's a great deal for them but for the mission centric business founders there isn't much point here. It can also leave you at significant risk of just being copied and thousands are, and in China it's just a rip parlor with thousands of business plans sent all over the internet and no one investing but everyone copying.

If a VC doesn't have standard terms they just simply aren't professional nor experienced. Of course it goes without saying they can move shells a hundred ways to custom a deal but they all have pre-defined parameters they will stick to. Some will be (nothing less than 20% stake) others always want control 51%, some will invest 5% in a hot new product with great terms and others won't. But if they won't give basics like this when most Pro-VC have it for all to see on their websites, forget it, walk.
First we look at your business plan and then talk terms
This is one of the most common VC lies in China from the Model and IP and product thieves. They lie to people endlessly "How can we invest if we don't even know the business???!!" Which is of course one in the many seemingly sensible piles of lies they tell. Of course again they all have set parameters and if you are outside them, like for example 1% of equity for 1 million dollars is your ask, it doesn't matter what the business is if its a gold producing microwave they aren't investing they are laughing at you pretending you are an idiot in their crooked evil greedy fashion of course. Save your time from these liars and stay far away, this type is the most dangerous VC ever. If a VC can't tell you what their fund parameters and deal structures they are looking for up front, they aren't just not professional, they are likely evil as hell itself. Maybe some might have done a little deal outside the box here or there, but to pretend that they or no one has standard pre-set parameters they like and don't invest in is absolutely dishonest, and they know it. They usually also never show who they invested in either. Be smart. Many Pro-VC want you to know all they have done in this regard before even contacting them, but they don't really publicize this and expect you to have access to this. This needs to be accounted for and you can try to look in some sources or kindly mention this to the VC if can't find it. Since Mission centric business founders will never be willing generally to give up 50% of their company in a Seed-A-B round unless it's temporary, you better know this if you are in that camp. If you just want to flip and burn to get rich and out quick well you may not care but those with personal identity in their companies and building lives and legacies in what they love to do and be a part of better know what the deal is. You can tell them you are a mission oriented business, but it seems 95% of VC don't want anywhere near these types of home run stable passionate performers due to not being able to rip as much free meat and control as usual.
UNder Construction
This page and site is still under construction. Bear with us.

Upcoming sections on this page are:

- Sell/chop
- Get him out asap
- Get others in
- Keep good ones out
- Aquisition is their goal, and if you don't want you will be denied
- They don't want IPO they want early flip
- They don't want whats good for you and the company prospects they want whats good for their exit
- Stability problem
- More conflict not less
- Boardroom tyrants and hassle
- Going against the CEO
- Icahn, Khosla don't go to board meetings any more

We look forward to sharing the absolutely massive amount of research we have done on Cambodia with you our potential investors, note holders, and supporters. Thanks.
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