recently rated:

Rated by 27

4.0 3.7 2.8 2.8 3.4

3.3

Index Ventures

Certified

$$$$$ Geneva, Europe

top rated funds:

Rated by 39

3.5 2.4 2.6 2.9 2.2

2.7

Benchmark Capital

Certified

$$$$$ Menlo Park, US West

Rated by 35

3.1 2.8 2.6 2.3 2.7

2.7

Highland Capital Partners

Certified

$$$$$ Lexington, US East

Rated by 17

3.0 2.8 2.8 2.6 2.5

2.7

Advanced Technology Ventures

Certified

$$$$$ Waltham, US East

Rated by 11

2.6 2.7 2.9 2.6 2.0

2.6

Oak Investment Partners

 

$$$$$ Westport, US East

Rated by 20

2.4 2.2 3.9 2.0 2.5

2.6

Seraph Group

 

$$$$$ US East

Rated by 11

2.9 2.4 2.5 2.4 2.6

2.6

Sequoia Capital India

 

$$$$$ Bangalore, Asia / Pacific

Rated by 12

2.4 2.8 2.6 2.2 2.8

2.6

El Dorado Ventures

Certified

$$$$$ Menlo Park, US West

Rated by 11

2.6 2.8 3.2 2.5 2.2

2.6

Boulder Ventures

 

$$$$$ Boulder, US Central

Rated by 37

2.7 2.6 2.6 2.5 2.5

2.6

US Venture Partners (USVP)

Certified

$$$$$ Menlo Park, US West

Rated by 26

2.7 2.6 2.9 2.6 2.4

2.6

Atlas Venture

Certified

$$$$$ Londond, Asia / Pacific

Rated by 21

2.6 2.3 2.9 2.8 2.2

2.6

Crosslink Capital

Certified

$$$$$ San Francisco, US West

Rated by 25

2.9 2.7 2.7 2.1 2.4

2.6

Edison Venture Fund

Certified

$$$$$ Lawrenceville, US East

Rated by 40

2.5 2.6 2.6 2.8 2.5

2.6

General Catalyst

 

$$$$$ Cambridge, US East

Rated by 10

3.0 2.3 2.1 1.8 3.2

2.5

Tallwood Venture Capital

 

$$$$$ Palo Alto, US West

Rated by 11

2.8 2.4 3.2 1.8 2.4

2.5

Arboretum Ventures

 

$$$$$ Ann Arbor, US Central

Rated by 19

3.2 2.3 2.6 1.9 2.6

2.5

Austin Ventures

Certified

$$$$$ Austin, US Central

Rated by 12

2.8 2.5 2.3 2.2 2.5

2.5

Carmel Ventures

Certified

$$$$$ Herzliya, ME / Africa

Rated by 37

2.5 2.3 2.5 2.8 2.6

2.5

Lightspeed Venture Partners

Certified

$$$$$ Menlo Park, US West

Rated by 13

2.5 2.4 2.0 2.7 2.4

2.4

The Angels Forum

 

$$$$$ Palo Alto, US West

Rated by 30

2.0 2.4 2.6 2.7 2.2

2.4

Ignition Partners

 

$$$$$ Bellevue, US West

Rated by 22

2.7 2.5 2.3 2.1 2.5

2.4

Giza Venture Capital

 

$$$$$ Tel Aviv, ME / Africa

Rated by 15

2.4 2.3 2.4 2.5 2.3

2.4

Maveron

Certified

$$$$$ Seattle, US West

Rated by 23

2.6 2.2 2.7 2.2 2.5

2.4

Alloy Ventures, Inc.

Certified

$$$$$ Palo Alto, US West

Rated by 14

2.7 2.3 2.5 2.0 2.0

2.3

Greycroft

 

$$$$$ New York, US East

Rated by 16

2.3 2.0 2.6 2.4 1.9

2.2

Granite Ventures

Certified

$$$$$ San Francisco, US West

Rated by 19

2.7 2.2 1.7 2.0 1.9

2.1

North Bridge Venture Partners

 

$$$$$ Waltham, US East

Rated by 29

2.4 1.9 1.8 2.1 2.1

2.1

DCM-Doll Capital Management

 

$$$$$ Menlo Park, US West

Rated by 19

2.1 2.1 2.2 2.0 2.2

2.1

Greenhill SAVP

Certified

$$$$$ New York, US East

Rated by 18

2.1 2.1 2.1 1.7 2.5

2.1

GrandBanks Capital

Certified

$$$$$ Newton Center, Canada

Rated by 15

2.5 1.9 2.1 1.8 2.0

2.1

Summit Partners

 

$$$$$ Boston, US East

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This advice is applicable in most negotiations, but it is particularly important to heed in venture capital: don't accept your first offer.

Venture capitalists are betting that they can pressure you to take the terms that they offer, and there are countless stories told by venture capitalists about how they duped CEOs with below-market valuations, excessive control provisions, and aggressive economic terms. I have heard venture capitalists laugh out loud when mentioning a company name and sat on a call where a VC actually whispered the pre-money valuation that was below $1 MM, referring to it as "unbelievable."

Practically speaking, why would any venture capitalist make you a good offer in the first pass of terms" If anything, they will make the lowest reasonable offer and then aggressively pressure you to take it with only minor changes. The good news is that, once a venture capitalist has decided to invest, you now have the negotiating leverage.

Members, read on for some very specific advice...

You have a piece of paper or a spreadsheet that shows how much you own of your company, normally called a capitalization table. You may have common stock. You may have options. When you take a venture round, the capitalization table neither represents your ownership nor the allocation of shareholder value. Most of the terms that create the Preferred Stock for venture capitalists chip away at the value of common stock and options, so much so that, after a few rounds of investments, the value of common and options are largely worthless. Let's take a look at why and what can be done.

There are the obvious "big" preferred terms that eat away at shareholder value in most liquidity events, such as promising to re-pay the investment first through a "liquidation preference" and then allowing the venture investors to "participate" in the remaining value allocation. Another classic term is to place founder equity in escrow and force the founder to earn it back over years. Then, there are the slew of other terms that reallocate smaller chunks of value, such as cumulative dividends, redemption rights, ratchets, right of first refusals, and expense reimbursements. Finally, there are the many uncertain outcomes, such as allocating escrow to a preference waterfall, that force last minute negotiations where the preferred shareholders have control in many liquidity situations.

Here are some tips for a management team to retain value AND ownership through the process:

(1) Encourage competitive bidding among interested investors

(2) Raise more money than you need and limit the number of investment rounds to two

(3) Eliminate all secondary terms from term sheets and investment agreements

(4) Control a majority of the board under all circumstances

(5) Insist on executed employment contracts with equity and cash guarantees on liquidity

(6) Add mandatory preferred approval of liquidity offers at pre-defined prices

If other people have tips. add them below. It is about time that the capitlization table represents reality!

Most of term sheets added here have founder share vesting, but not mine. Here are a few good tips. First, you should negotiate hard on the number of years and the cliff. Nothing is "standard" with these deals. Second, try to get the VC to grant you "credit" for time served since company inception. Time served happens frequently with hot deals. Third, buy your initial shares with real money to justify your negotiating position. You are in a stronger position to reduce of eliminate the vesting if you have skin in the game.

What are folks finding in their discussions for negotiating Participating vs. Non-Participating. ...

We are trying to close a Series C in the biotech space. Has anyone ever seen a 3X Participating Pf. "

So, most VC's will draw out the period between initial diligence and offering a term sheet. It's just part of the game. Every day that goes by is another day to judge your success or failure. However, when you get your first term sheet from a lead, it normally has a cascading effect to get other funds that you are talking with to move, either to be a follow-on investor to the first lead or to issue their own terms.

Members, read on for some tips and tricks to get that first sheet...

When you hear the comment that this term sheet / shareholder agreement is an industry standard you should be very cautious. There are no standards. The phrase means that there are clauses that even the VC feels a bit uncomfortable presenting (or don't think that you will approve them).