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Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

Brad Feld, Jason Mendelson · 5 HN comments
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Amazon Summary
Get the inside scoop on what venture capitalists want to see in your startup as you hit the fundraising trail. This is the highly anticipated third edition of the best-selling book which has become the definitive resource for understanding venture capital fundraising. Whether you are an entrepreneur, lawyer, student or just have an interest in the venture capital ecosystem, Venture Deals is for you. The book dives deeply into how deals are constructed, why certain terms matter (and others don’t), and more importantly, what motivates venture capitalists to propose certain outcomes. You’ll see the process of negotiating from the eyes of two seasoned venture capitalists who have over 40 years of investing experience as VCs, LPs, angels, and founders. They will teach you how to develop a fundraising strategy that will be a win for all parties involved. This book is designed to bring transparency to the venture capital funding process and includes such topics as: How to raise money; What terms matter and which ones don’t; How to negotiate a fair deal for everyone; What makes venture capitalists tick, including how they are compensated and motivated; How companies are valued by venture capitalists; How all current structures of funding work, including convertible debt, crowdfunding, pre-sales and other non-traditional methods; How these particular issues change through different stages of financing (seed, early, mid and late); and How to avoid business and legal pitfalls that many entrepreneurs make. And as in the previous editions, this book isn’t just a one-sided opinion from venture capitalists, but also has helpful commentary throughout from a veteran CEO who has raised many rounds of financing from many different investors. If you are ready to learn all the secrets and ins and outs of fundraising, Venture Deals is an essential read.
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Hacker News Stories and Comments

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As a developer turned co-CEO, developing an understanding of the differences between cashflow, revenue, profit, and overhead was critical.

My recommendations are a little different from most other folks here, in that they relate to understanding the business as a whole and how finance figures into it:

Norm Brodsky's "The Knack"

Jack Stack's "A Stake in the Outcome"

If you're in a startup environment, Brad Feld's "Venture Deals"

The investors in VC funds are called Limited Partners (LPs), as opposed to General Partners (GPs). LPs raise money from high-net worth individuals (HNWIs), funds of funds, etc.

Maybe what you read had some qualifier attached to it like across all VC funds "on average". With funds, the outliers are everything like with successful startups. Deal flow varies greatly by VC. A similar comment, and one that holds up, is that most startup accelerators have 0 "successful" exits.

Brad Feld's book Venture Deals [1] is a great reference if you want to learn a bit more from multiple perspectives.


May I recommend anyone wishing to understand more about valuation read the book Venture Deals?

The subtitle is tongue in cheek but also gives you a sense of how much you can learn and how rare company you are in once you understand the details.

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