The fallacy of Participating Preferred

Once in a while I see a startup that gave its Series A investors participating preferred shares. Not unexpectedly, this is more common with startups that raised money from Israeli VCs. For those who aren’t familiar with how participating preferred shares (PPS) work, it’s a very simple structure: When the company exits (a liquidation event),… Continue reading The fallacy of Participating Preferred

Winning the away game

It is a well-known fact that sports teams benefit from a home court advantage. In fact, NBA teams consistently win about 60 percent of games that are played in their home arenas. The same phenomena is true for international startups which need to compete in the US, outside their comfort zone. This is always the… Continue reading Winning the away game

How to improve your investment pitch

There are many blog posts out there about how to build your VC pitch deck, what to include and not include in it etc. But much more important than what you say is how you say it. At the end of the day, the one thing that investors care about most is YOU. When we… Continue reading How to improve your investment pitch

Choosing the right partner

In my previous post, I talked about the importance of having a financing strategy, and one of the most important elements of your financing strategy is selecting the right investor. When you choose an investor you are committing to them much like you’d commit to a spouse. But unlike in marriage—where you can get divorced without burning… Continue reading Choosing the right partner

The importance of a Financing strategy

Every good entrepreneur has a clear business strategy. Most likely, he has also spent a lot of time thinking about his Go To Market (GTM) strategy and how to best acquire customers.  Some even go as far as having an HR strategy for when and how they recruit senior executives. The one thing that is… Continue reading The importance of a Financing strategy

You deserve better! Bad investor behavior

Raising capital is a full time job. Except for a few lucky startups that cruise through the process, most entrepreneurs find themselves spending too much time fundraising. Instead of focusing on the important aspects of your company like building a great product or winning another customer, you are forced to wander around VC land and courageously defend your business plan as investors tear it apart… Continue reading You deserve better! Bad investor behavior

Why valuations don’t reflect real value

In the previous post we discussed how the public market values SaaS companies and which metrics you should measure.  Today I want to discuss what happens behind the scenes when investors determine the value of an early stage startup. The truth is that determining the value of a startup is much more art than science. The reason is that as investors we… Continue reading Why valuations don’t reflect real value