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Making sense of venture capital

Recent Articles
Venture Capital for Founders
What is a 409A Valuation?
A 409A valuation is an independent third-party valuation of a startup's common stock that informs the price of employee stock options.
Apr 06, 2022
Venture Capital for Founders
What is an Employee Option Pool?
Employee option pools are shares of a startup specifically reserved for the company’s employees.
Apr 05, 2022
Venture Capital for Founders
What is a Cap Table?
Cap tables present a detailed breakdown of a startup’s ownership.
Apr 04, 2022
Venture Capital & Taxes
Schedule K-1 for VCs
The Schedule K-1 helps an investor in a venture fund understand their share of taxable earnings for the given year.
Apr 02, 2022
Venture Capital & Taxes
What is Qualified Small Business Stock?
The use of qualified small business stock in venture investing can save investors millions in capital gains taxes.
Apr 01, 2022
Venture Capital Glossary
What is an SPV?
SPVs allow investors to pool their money together to invest in a single company.
Mar 31, 2022
Venture Capital Glossary
What is a SAFE?
SAFEs give an investor the right to convert their SAFE into equity at the company’s next equity financing round or liquidation event.
Mar 30, 2022
Venture Capital Glossary
What is a Convertible Note?
Convertible notes are a type of loan that gives investors the right to convert their debt into equity at a predetermined event.
Mar 29, 2022
Venture Capital Glossary
What is a Liquidation Preference?
Liquidation preferences dictate the order and amount investors get paid when there's an exit.
Mar 28, 2022
Venture Capital Glossary
What are Pro Rata Rights?
Pro rata rights can help investors maintain their ownership stake in a startup as it grows.
Mar 27, 2022
Venture Capital Glossary
What is Anti-Dilution Protection?
Anti-dilution provisions help protect investors’ shares from losing value in a ‘down round.’
Mar 26, 2022
Venture Capital Glossary
What Are Protective Provisions?
Protective provisions give preferred shareholders the right to veto specific corporate actions that could impact their investment.
Mar 25, 2022
Venture Capital Glossary
What are Drag Along Rights?
Drag along rights give the majority shareholder(s) the power to compel minority shareholders to participate in an acquisition.
Mar 24, 2022
Venture Capital Glossary
What is a Right of First Refusal?
A right of first refusal gives its holders “first dibs” on any share sale in a startup.
Mar 23, 2022
Venture Capital Economics
Venture Capital Fee Economics
Venture is a service industry. And just like any service, it costs money. Here are the fees you can expect when investing in venture.
Mar 12, 2022
Venture Capital Economics
What is a Pre-Money Valuation?
A pre-money valuation is what a startup is believed to be worth prior to raising a round of funding.
Mar 11, 2022
Venture Capital Economics
What is a Post-Money Valuation?
A post-money valuation is what a company is deemed to be worth after having raised a new round of financing.
Mar 10, 2022
Venture Capital Economics
Carried Interest in Venture Capital
Carried interest is the primary way general partners get paid for managing a venture fund.
Mar 09, 2022
Venture Capital Economics
What to Know About TVPI
Investors use TVPI to analyze the return on their investment in a venture fund.
Mar 08, 2022
Venture Capital Economics
Internal Rate of Return: What You Need to Know
Internal rate of return is a common metric used in venture to compare a fund’s performance across vintage years.
Mar 07, 2022
Venture Capital Economics
What is ASC 820?
ASC 820 sets out how venture funds should determine and report the fair values of their portfolio companies.
Mar 07, 2022
Investing in Venture Capital
What Does a Limited Partner Do?
LPs provide the capital for funds to invest. In return, they hope for profits and, in some cases, access to information and future deals.
Feb 12, 2022
Investing in Venture Capital
Venture vs. Stocks & Real Estate
Venture differs from other major asset classes in several key ways, including access, return profile, and risk profile.
Feb 11, 2022
Investing in Venture Capital
The Basics of Venture Capital Fund Distributions
A distribution is the process by which a fund returns capital to its investors.
Feb 10, 2022
Investing in Venture Capital
Accredited Investors vs. Qualified Purchasers: What You Need to Know
The accredited investor and qualified purchaser standards determine which investment opportunities an investor can participate in.
Feb 09, 2022
Investing in Venture Capital
How Do Capital Calls Work?
Capital calls give fund managers the legal right to demand capital from the fund’s investors.
Feb 08, 2022
Running a Venture Capital Fund
What is a Venture Capital Fund?
Venture capital funds are pooled investment vehicles that provide capital to startups in exchange for equity.
Jan 31, 2022
Running a Venture Capital Fund
What Does a General Partner Do?
The general partner of a venture fund raises and allocates investor capital and supports the founders of the companies they invest in.
Jan 30, 2022
Running a Venture Capital Fund
Venture Capital Equity Financing Documents
The venture capital equity financing documents dictate the economics and control offered to investors and founders of a startup.
Jan 29, 2022
Running a Venture Capital Fund
Preferred Shares vs. Common Shares
Venture investors typically negotiate for preferred shares because preferred shares grant certain rights, privileges, and preferences that common shareholders do not receive.
Jan 28, 2022
Running a Venture Capital Fund
What is a Liquidity Event?
Liquidity events can be viewed as the “end game” for venture investors, giving them the opportunity to convert their illiquid stake in a startup into liquid assets.
Jan 27, 2022
Running a Venture Capital Fund
The Basics of Venture Capital Management Companies
Management company structure has an important impact on a venture capital fund’s activities.
Jan 26, 2022
Running a Venture Capital Fund
What is an Exempt Reporting Advisor?
Qualifying venture capital fund advisers are exempt from registering with the SEC and from many provisions of the Advisers Act via Exempt Reporting Adviser (ERA) status.
Jan 26, 2022
Running a Venture Capital Fund
What is a Fund of Funds?
A venture fund of funds is a fund that invests in other venture funds. Investing in a fund of funds offers portfolio diversification.
Jan 25, 2022
Running a Venture Capital Fund
Venture Capital Fund Recycling
Venture capital fund recycling—when GPs reinvest returns from early exits back into the portfolio—increases investable capital and can potentially increase fund returns.
Jan 24, 2022
Running a Venture Capital Fund
What is a Bridge Round?
Bridge rounds help startups “bridge” the gap between larger funding rounds. While not always ideal, they can be necessary to keep the company afloat.
Jan 23, 2022
Running a Venture Capital Fund
What Are Blue Sky Laws?
Blue sky laws protect investors against securities fraud. Most venture fund offerings are exempt from blue sky law registration requirements, but fund managers often need to make notice filings with the state.
Jan 22, 2022
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