a company leaves the venture ecosystem one of three ways: via an initial public offering (IPO), a merger or acquisition, or bankruptcy and a wind down.

convertible debt documents are pretty simple and don’t require much legal time and expense.

Option pricing model—The newest (at least to VC firms) tool in the valuation tool set is what’s called an “option pricing model” (OPM).

they want to be comfortable that your process of evaluating the market needs to date is robust enough to enable you to adapt appropriately to changing market demands.

through iterative testing with real customers will the company get the feedback needed to build a truly breakthrough product.

Borrowing from our comparable company analysis above, let’s assume that mature comparable companies trade at a revenue multiple of five. So to achieve our $500 million valuation goal for XYZ Company, it needs to be generating $100 million in revenue.

detail of your business in a way that shows depth of preparation and conviction.

blanket transfer restriction means that shareholders cannot sell without some form of company consent—often the board’s consent is required to do so. And

A hurdle rate says that unless the fund generates a return in excess of the hurdle rate (this is a negotiated number, but often around 8 percent), the GP is not entitled to take her carried interest on the profits. If the fund exceeds the hurdle rate, then the GP can start collecting her carried interest as if the hurdle rate didn’t exist. So, as