Did We Perfect Modern Early Stage Financing?

6min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

Most often companies will do their first fund raising on a safe, convertible promissory note. Then they will do a price round afterward and all those safes and convertible promise notes will convert into stock safes. Convertible securityes because people who hold, investors that hold convertible securities are not stockholders. You actually don't. There's no excuse for being surprised by realizing you sold 30 % of your companyt all your angel investors.

We've cut down the ninth week of lectures to be even shorter and combined them into one podcast.

First, a lecture from Carolynn Levy. Carolynn is a partner at YC. Her lecture covers modern startup financing.

Then a lecture from Jared Friedman. Jared is also a partner at YC. His lecture focuses on advice for hard-tech and biotech founders.

***

Topics

00:00 - Intro

00:33 - Carolynn Levy - Modern Startup Financing

1:33 - The basics: form a corporation, need money to grow?, sell a part of the company

2:58 - Fundraising terms

3:58 - What has changed: structure, access, focus

5:10 - What hasn't changed: preferred stock financing, valuation and dilution, communication

6:42 - Old way of raising early money: Series A preferred stock financing

8:33 - What was broken?

9:33 - The transition: bridge loan financings

10:46 - Realization: convertible promissory notes are a better way to fund early stage startups

12:01 - Modernization of the convertible - SAFE (Simple Agreement for Future Equity)

14:03 - When do priced rounds happen?

15:12 - Is modern early stage financing perfected?

18:01 - Takeaways

19:30 - Jared Friedman - Advice for Hard-tech and Biotech Founders

20:25 - What is a hard-tech company?

21:35 - Why start a hard-tech company?

25:06 - YC is the largest bio and hard-tech seed investor in the world

25:49 - How much of YC's advice applies to hard-tech founders?

26:33 - How do you make progress when you have a "heavy MVP"?

31:49 - How do you prove people will want your product, if you haven't built it yet?

32:57 - Letter of Intent

34:10 - Fundraising for hard-tech and biotech companies

36:15 - Final thought