Figuring Out The Term Sheet Terminology
An entrepreneur looking for funding from investors has to understand a whole new terminlogy related to the investment terms. We thought it would be useful to give you basics of the most important ones, along with examples or further real-life implications. By the way, it is not uncommon that the other side (for example less experienced Angel Investors) are also not familiar with these terms, so this list can be useful for both sides of the table.
Have any words or phrases to suggest? Let us know in the comments!
Accredited Investor (US+UK): A high-worth individual allowed by their government to make risky investments in private equity.
Angel: A high-worth individual who invests in startups. Generally speaking, Angels are less afraid to take greater risk, and usually invest with their own money.
Common Stock: The unit of ownership of the company typically owned by the founders. Common Stock is also the lowest level of financing. If the company goes into bankruptcy, money is only repaid back to common stockholders once the liquidation money is first paid to debt and preferred stockholders.
Convertible note: A form of financing where the company is lent money which acts like debt, unless… Continue reading
In Crowd-Investing It Matters To Value Your Company Right
Valuing early stage startups is not an exact science. Angels and VC’s try to use criteria based on the strength of the management team, potential revenues, competitors, and potential exits in order to determine the valuation of their investments. But valuations can also be driven by demand from investors or fear of missing out on an opportunity.
When a company is getting funded, the starting point of its valuation is usually given by its investors. By naming a price first, founders risk giving their investors a bargain, or out-pricing them high enough to lose credibility. In crowd-investing you probably will not have professional investors driving your valuation, so we’ll take a look ways to tackle this issue yourself.
Self Valuation Steps
As you’re picking a valuation, it’s important to balance your needs against your investors’ needs. To entrepreneurs, a higher valuation means more money exchanged for less ownership of their company. But to investors, valuation is the key determinant of their investment’s return. Investors are putting money into your company based on the premise that the valuation of their shares will increase, and a higher valuation means less bang for their buck.
It may not even be great for your… Continue reading
Press Release: New Crowd Investing Service Venture Bonsai Launched
NEW CROWD INVESTING SERVICE VENTURE BONSAI LAUNCHED
Venture Bonsai is a new tool for startups running Crowd Investing investment rounds. This means raising money from many parties in small chunks instead of a few larger investments. Venture Bonsai enables versatile pre-investment communication between the investor prospects and the entrepreneurs, combined with social media mechanisms. Venture Bonsai is first of its kind to offer a complete tool set for all parties to manage the whole investment process.
Supporting growth companies is largely seen as important for Europe and its future. However political intentions alone do not help, it is positive action that’s required. That is the idea behind Venture Bonsai, founded by experienced serial entrepreneurs with the courage to implement real and useful tools using private funds.
“Venture Bonsai is the first startup funding tool accessible to any private investor. It allows anybody to become an angel investor with investments just as small as 5000 euro, opening up the opportunity to invest in the next Googles or Facebooks”, says Antti T. Hannula, Chairman of the Board. “I’ve been an entrepreneur for quite many years, and it is amazing what you can achieve nowadays with relatively small investments, for example 100,000 euros.… Continue reading
COMUNICADO: Se lanza el nuevo servicio de inversiones en grupo de Venture Bonsai
COMUNICADO: Se lanza el nuevo servicio de inversiones en grupo de Venture Bonsai
Venture Bonsai es una nueva herramienta para iniciadores que utilizan las rondas de inversión Crowd Investing. Con ello se consigue dinero de muchas partes en pequeñas cantidades en lugar de menos inversiones de tamaño mayor. Venture Bonsai permite una comunicación versátil antes de inversiones entre los prospectos de los inversores y los empresarios, combinados con mecanismos para medios sociales. Venture Bonsai es el primero de su clase en ofrecer un set complete de herramientas para todas las partes y su gestión de los procesos de inversiones totales.
El apoyo al crecimiento de las compañías es considerado como importante para Europa y su futuro. Aún así, solo las intenciones políticas no ayudan, por lo que es necesaria una acción positiva. Esa es la idea detrás de Venture Bonsai, que se fundó por medio de empresarios en serie experimentados con el coraje de implementar las herramientas reales y útiles utilizando fondos privados.
“Venture Bonsai es la primera herramienta de fondos de inicio accesible por cualquier inversor privado. Permite a todo el mundo convertirse en un inversor ángel con inversiones de tan solo 5.000 euros, abriendo oportunidades para invertir en… Continue reading
Press Release: Lancement du nouveau Service Venture Bonsai pour les Investissements participatifs
Lancement du nouveau Service Venture Bonsai pour les Investissements participatifs
Venture Bonsai est un nouvel outil pour les jeunes pousses organisant des rounds d’investissements participatifs. Cela signifie recueillir des fonds auprès de plusieurs parties en petits montants au lieu de plusieurs investissements plus importants. Venture Bonsai permet une communication facile entre les perspectives de l’investisseur et les entrepreneurs, associée aux mécanismes des médias sociaux. Venture Bonsai est le premier de ce genre à proposer un ensemble complet d’outils afin que toutes les parties puissent gérer tout le processus d’investissement.
Soutenir les sociétés en pleine croissance est largement considéré comme important pour l’Europe et son avenir. Cependant, les intentions politiques seules ne sont pas suffisantes, c’est l’action positive qui est nécessaire. C’est l’idée à la base de Venture Bonsai, créé par des entrepreneurs expérimentés créateurs d’entreprises en série qui ont le courage d’implémenter des instruments véritables et utiles en utilisant des fonds privés.
<< Venture Bonsai est le premier instrument de financement des jeunes pousses accessible aux investisseurs privés. Il permet à n’importe qui de devenir un investisseur providentiel avec des investissements aussi peu importants que 5000 euros, en ouvrant la possibilité d’investir dans les prochains Google ou Facebook, >> a déclaré Antti… Continue reading
Press Release: Neuer Crowd-Investing-Service "Venture Bonsai" auf dem Markt
Neuer Crowd-Investing-Service “Venture Bonsai” auf dem Markt
Venture Bonsai ist ein neues Tool für Existenzgründer, die Investitionsrunden im Rahmen von Crowd Investing anstreben. Crowd Investing bedeutet, statt einigen wenigen grossen Investitionen kleinere Mengen an Kapital von mehreren Parteien zu sammeln. Venture Bonsai ermöglicht vielseitige Kommunikation zwischen den Investoren und den Unternehmern in der Vorinvestitionsphase, kombiniert mit Social-Media-Mechanismen. Venture Bonsai ist dadurch, dass er einen kompletten Tool-Satz für alle Parteien zur Verwaltung des gesamten Investitionsprozesses bietet, der erste Service seiner Art.
Die Unterstützung aufstrebender Unternehmen wird für Europa und seine Zukunft weitgehend als sehr wichtig angesehen. Politische Absichten allein helfen jedoch nicht, es bedarf aktiver Unterstützung. Das ist die Idee hinter Venture Bonsai, das von erfahrenen Serienunternehmern gegründet wurde, die die Courage besassen, echte und nützliche Tools mittels privater Gelder zu realisieren.
“Venture Bonsai ist das erste Finanzierungs-Tool für Existenzgründer, das für jeden privaten Investor zugänglich ist. Mit Investitionen in Höhe von lediglich 5000 EUR ist jedermann in der Lage, ein Unternehmensengel zu werden. Ein jeder hat die Möglichkeit, in das nächste Google oder Facebook zu investieren”, erklärte Antti T. Hannula, Aufsichtsratsvorsitzender. “Ich bin seit vielen Jahren Unternehmer, und es ist wirklich erstaunlich, was man heutzutage mit relativ kleinen Investitionen, wie… Continue reading
Soon, the Wait is Over. Launching Venture Bonsai.
The moment we all have been waiting for is soon at hand!
We’re proud to inform you that we’ll be launching Venture Bonsai during the second week of April. If you’re interested in service already now, please request an invite!
Venture Bonsai is a tool for running and managing an Equity Crowdfunding investment round with ease. The service enables versatile pre-investment communication between the investor prospects and entrepreneurs, combined with social media mechanisms. Venture Bonsai also offers a complete tool set for all parties to manage the whole investment process.
For private investors Venture Bonsai is the most trusted and reliable place to discover, follow and invest in the most promising companies with a standardized process and an emphasis on trust and transparency. When investing, the minimum investment for an individual investor is typically 5.000 euros.
Benefits of Standardized Startup Documents (Revised)
This is a revised edition of the original blog entry in August, 2010. At that time we set to implement the first set of standardized documents for European entrepreneurs and private investors. We worked together with Borenius&Kemppinen and the documents were released in January 2011 as Venture Bonsai Legal Framework. This blog entry is to explain our view on the importance of the standardized documents for the startup ecosystem in Europe.
Traditionally, running an investment round has meant a lot of work with the legal documents. Getting the Term Sheet and Shareholders’ Agreement into such a document that all parties agree on, can mean a lot of work and legal costs. Quite often it’s also the investors who bring the initial document on the table (as often the entrepreneurs don’t have those in the first place). It certainly makes sense to improve this process with higher quality of documents and more transparent understanding of acceptable and on the other hand, not acceptable terms.
But what is the definition of a standardized document?
For me it is a document that is acceptable for all parties (investors and entrepreneurs alike) as such, without any tough negotiation concerning the key issues. The… Continue reading
It's All About Trust
When it comes to investing in start-ups, it’s all about trust. Do you feel confident that this team, company, and product will live up to its expectations? Even if you’re investing relatively small amount of money (say, for example 5.000€) it’s still a big amount that requires trust between both parties. It’s your money, after all.
What is trust, anyway?
Wikipedia defines trust as
- the willingness of one party (trustor) to be vulnerable to the actions of another party (trustee);
- reasonable expectation (confidence) of the trustor that the trustee will behave in a way beneficial to the trustor;
- risk of harm to the trustor if the trustee will not behave accordingly; and
- the absence of trustor’s enforcement or control over actions performed by the trustee.
Within the scope of Venture Bonsai, you probably would be interested in
- as an entrepreneur, do I trust certain person enough to let him to see my Investment Round material?
- as an entrepreneur, do I trust Venture Bonsai as a platform to run my investment round ?
- as an investor, do I trust certain person enough to invest in his company?
- as an investor, do I trust Venture Bonsai as a platform to invest through… Continue reading
Video: Venture Bonsai for Entrepreneurs
There’s this new video which explains the many benefits of Venture Bonsai for entrepreneurs. Venture Bonsai is a growth ecosystem for entrepreneurs to build profile and trust, already before funding is necessary. And of course, enabling crowdfunding process in a reliable and easy way.
Check this out!
[tube]http://www.youtube.com/watch?v=-anaofgyW88[/tube]