No Snivelling

I attended a breakfast meeting today for the Northwest Entrepreneur Network today -- the theme was Anatomy of a Venture Financing -- overall, it was a good event. One thing that surprised me was how little ownership founders generally maintain after several rounds of financing. To see what I mean, go to the site (linked above) and then download the presentation for this event, and check out Slide #7. Basically, in a very successful scenario, the founders end up with <8% of the company... amazing!

Here are some of my bullet point takeaways from the morning:
* Tie up IP early, when when/if you are still at your previous employer
* Document every penny you spend, to help justify your investment/ownership later
* Need succict business proposition early on
* Define market potential for your business
* Define minimum investment to get to exit
* Founders must have skin in the game ($) beyond lost wages
* Is company a feature, or a business?
* Realistic Cap Table, & right founder %'s (50/50 usually doesn't make sense)
* Resolve all shareholder agreements before looking for any $
* Valuation = 12 month forward revenue
* Due Diligence = auditing the business plan (what will you do, how soon, multiples)
* VC's prefer Corp's to LLC's (because existing law on the books)
- LLC & S-Corp pass on income & VC's can't have income
* 25 Page biz plan & powerpoint suffice (avoid tirekickers of your plans)
* Board members (a) must open doors and (b) act as mentor for CEO
* Insist on pro-rata investment rights for folks in each financing round

My only complaint about the session? Getting up before 6AM, or course!