Angel Experts on Investing, Terms and Valuations
Three investors with Tech Coast Angels with over 130 investments in startups between them, think they have some advice on due diligence? What lessons have they learned the hard way? In this interview Dave Berkus, John Harbison and Luis Villalobos tell all their stories about investing in early stage companies.
Entrepreneurs will hear the candid perspectives, the voice of experience of what happens at the critical stage of negotiating a term sheet. Why do early stage investors want to escrow founders' stock? And what is a Participating Preference? Hear these patient investors describe the issues that go into closing every early stage deal. What if the business succeeds, generates great cash flow and turns into a lifestyle business? How can investors trigger an exit? Among these three, we have all the answers.
Want to hear more? Check out Dave's previous podcast #108 and his essay. John was recently on the show, listen to podcast #116. Luis tells the story of founding the Tech Coast Angels in podcast #72.
Show #126 (1:13:46)
Comments
Frank, this is your best one yet! Invaluable.
Lou
Posted by: Lou Volpano | October 17, 2007 03:09 PM
I enjoyed listening to your last podcast with Dave
Berkus, John Harbison and Luis Villalobos. We're in
the process of talking to investors about our business and so much of the discussion was very relevant.
I have a question for you...Do you know where I can find some example investment agreements between start-ups and equity investment companies? I have
agreements that I've used in the past that have been
drafted by attorneys, but these were for individual
investors putting money into a venture. I'm just
curious to see an actual agreement and see how some of the angels and equity cos. structure their funding.
Thanks, Ron
Posted by: Ron Perkins | October 18, 2007 03:24 PM
This podcast on due diligence should be required listening for
each first-time entrepreneur going through TCA.
After the entrepreneur listens to the podcast, you could quiz them with a few questions:
What does pre-money/post-money valuation mean?
What does participating preferences mean?
What is a "dirty corporation"?
Explain the advantages and disadvantages when founders put their stock in escrow.
This could certainly be one way to filter out serious TCA applicants
from the rest. Since most young entrepreneurs don't understand the basics you can just tell them to listen to the Podcast. If they're coachable then they'd be willing to invest less than 90 minutes of
their time. Obviously, it's not the only criteria, but it's beneficial to all involved.
All the best,
Joe Moreno
Posted by: Joe Moreno | October 19, 2007 02:29 PM
Great show, thx for the reminder. It's not too long!!! I haven't heard one for a while. These emails are great prods to go back.
Thx again,
mz
Posted by: Mike Zelkind | October 19, 2007 02:31 PM