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Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist Hardcover – 29 Jan 2013
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From the Inside Flap
Although it hasn′t been very long since the first edition of Venture Deals was published, the need for information in this evolving field continues to grow. That′s why Brad Feld and Jason Mendelson have returned with the Second Edition of Venture Deals. While staying true to the original edition of this Wall Street Journal bestseller, the Second Edition contains timely updates as well as new material on topics such as convertible debt financing that will help you excel at this difficult endeavor.
Some of today′s fastest–growing entrepreneurial companies have financed themselves by raising venture capital. Yet few people have a firm grasp of how venture capital deals really come together. Nobody understands this situation better than Brad Feld and Jason Mendelson. For over twenty years, they′ve been involved in hundreds of venture capital financings, and now, with this practical guide, they continue to share their experiences in this field with you.
Venture Deals, Second Edition opens with an informative overview of the venture capital term sheet and takes the time to discuss the different parties who participate in venture capital transactions as well as how entrepreneurs should go about raising money from a venture capitalist. From here, the book skillfully outlines the essential elements of the venture capital term sheet from terms related to economics to those related to control. Feld and Mendelson strive to give a balanced view of the particular terms along with the strategies to getting to a fair deal.
In addition to examining the nuts and bolts of the term sheet, this reliable resource also reveals how VC firms operate, describes how to apply different negotiating tactics to your deals, and introduces you to issues you may face at different stages of financing. You′ll also gain valuable insights into several common legal issues most startups face and, as a bonus, discover what a typical letter of intent to acquire your company looks like.
Whether you′re an experienced or aspiring entrepreneur, venture capitalist, or lawyer who partakes in these particular types of deals, you will benefit from the insights found throughout the Second Edition of Venture Deals.
For additional information that includes term sheets as well as all of the documents that are generated from the term sheet as part of venturing financing, visit the authors′ website www.askthevc.com.
From the Back Cover
Praise for the First Edition of Venture Deals
"My biggest nightmare is taking advantage of an entrepreneur without even realizing it. It happens because VCs are experts in financings and most entrepreneurs are not. Brad and Jason are out to fix that problem with Venture Deals. This book is long overdue and badly needed."
Fred Wilson, Managing Partner, Union Square Ventures
"Feld and Mendelson pack a graduate–level course into this energetic and accessible book. The authors′ frank style and incisive insight make this a must–read for high–growth company entrepreneurs, early–stage investors, and graduate students. Start here if you want to understand venture capital deal structure and strategies. I enthusiastically recommend."
Brad Bernthal, CU Boulder, Associate Clinical Professor of Law, Technology Policy, Entrepreneurial Law
"A must–read book for entrepreneurs. Brad and Jason demystify the overly complex world of term sheets and M&A, cutting through the legalese and focusing on what really matters. That′s a good thing not just for entrepreneurs, but also for venture capitalists, angels, and lawyers. Having an educated entrepreneur on the other side of the table means you spend your time negotiating the important issues and ultimately get to the right deal faster."
Greg Gottesman, Managing Director, Madrona Venture Group
"Venture Deals is a must–read for any entrepreneur contemplating or currently leading a venture–backed company. Brad and Jason are highly respected investors who shoot straight from the hip and tell it like it is, bringing a level of transparency to a process that is rarely well understood. It′s like having a venture capitalist as a best friend who is looking out for your best interests and happy to answer all of your questions."
Emily Mendell, Vice President of Communications, National Venture Capital Association
"The adventure of starting and growing a company can be exhilarating or excruciating or both. Feld and Mendelson have done a masterful job of shedding light on what can either become one of the most helpful or dreadful experiences for entrepreneurs accepting venture capital into their firm. This book takes the lid off the black box and helps entrepreneurs understand the economics and control provisions of working with a venture partner."
Lesa Mitchell, Vice President, Advancing Innovation, Kauffman Foundation
Top customer reviews
An essential part of any start-up is understanding the term-sheet and learning how to negotiate with investors. This book covers a wide range of essential VC deal topics from understanding what VCs are, to how they raise their funds and importantly the structure and implications of the term sheet. The latter point is the focus of the book and the most valuable takeaway. Not learning about how a term sheet is created, why the terms are there in the first place and the implications for you and your shareholders of said terms is ridiculous, lazy and actually a sign of incompetence. Now of course there will be situations where you do a bad raise and you actively understand your getting a bum deal. But to put yourself in that situation because you didn’t prepare and learn about what you were getting yourself into, that’s an error that could have been avoided. This book explains what to do, what not to do and how the VCs themselves are thinking. It gives you an honest insight from the other side of the table from two highly experienced VCs with over 17 years of investing experience (at the time of publication). They have done hundreds of deals and negotiated thousands of term sheets. You on the other hand will be faced with your first, hence why this book is a must-have.
The authors walk you through the whole term sheet, explaining what on the surface may seem like complex terms in a thorough and easily digestible manner. This book is certainly accessible to first time entrepreneurs with limited knowledge of finance or business. That does not mean however that more seasoned individuals would not benefit from its insight. The amount of times I have heard ‘knowledgeable’ founders say stuff like ‘it’s okay, we will just hire a lawyer’ is absurd. Unless that lawyer is experienced in VC financings, they likely know little more than you and relying on them is a mistake (and a costly one). After reading this book you will know within 5 minutes of meeting any potential lawyer whether they are going to be valuable to you and your term sheet negotiations. At just over 200 pages it is a quick read and in no way boring or tedious. The style of the book follows the following overarching format: what does the particular clause mean? - why is it there? – why should the founder care? – why should the VC care? - what are the implications of the clause? - can it be negotiated? - should you bother negotiating it etc. Appendices include an example term sheet, an example letter of intent and links to additional entrepreneur-valuable resources. There is also a thorough glossary in case you need to refer back to what some of the legal jargon actually means.
Stories of flying cars and worlds inhabited by super hot AI-solved robots are sexy, the idea of a book on term sheets is outright mundane. Yet the later is inherently more valuable to the entrepreneur. The price of this book is ~$35, its value is easily tens to hundreds of $1000s (I can only imagine the wide-spread delight that passed through the VC community upon its release………). Buy it, read it and then give it to someone else.
Thank you Brad and Jason! I know I will come back to this book many times.
Venture capital world is very much in fashion at the moment, and yet, most people don't know how the world of ventures functions on a practical level. Everyone wants to be there, but how do you get in?
I think the authors have done a great service to all of us in being honest in this book as well as explaining in straight and easy language how entrepreneurs should go about in entering this world.
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