Combining nearly two years of research, writing, and editing by the Holloway team and expert contributors, this Guide is gearing up to be the most comprehensive compendium of knowledge on how venture capital works. Edition 0.5 is an 11-hour read—roughly 275 pages in a standard print book—and includes over 700 sources and hundreds of hours of writing and editorial contributions. But we know how busy you are! Each chapter covers a specific topic, and most can be read over your lunch break. We’ve researched and synthesized everything founders need to know, so you can use your time effectively. We’re releasing the Guide via paid access this Spring; to be the first to know, sign up for the waitlist. If you’re an entrepreneur or VC who might be interested in reviewing the Guide, or you’re actively fundraising, send us a note at firstname.lastname@example.org.
As we near the release of this Guide, we want to share some details about what we’ve been focused on. We believe in building in public, and part of that is revealing our editorial, engineering, and business processes as they develop. Like our software, we produce and release updates to our Guides continually—this edition is the fifth iteration of expanded, revised, and expert-reviewed content that we’ve made available to our early release readers. And we’ll continue to update and improve the Guide once it’s publicly available. Editorial release notes like these let you know about improvements to the Guide, and where to look for new information. If you find something valuable or interesting or cool in these notes, or if there’s anything we don’t include that you want to know about, please let us know by emailing email@example.com.
Here’s what’s included in this release:
We are extremely grateful to Brad Feld (VC at Foundry Group), Michael Brown (attorney at Fenwick & West), and Darby Wong and Chris Field (founders at Clerky) for their significant, in-depth review of the material. They pulled no punches and we’ve included or incorporated every comment, so you can benefit from their combined decades of experience.
Raising money at Series A or later is typically more straightforward compared to early-stage financing. But for companies new to the process, it can be hard to know what to expect. A casual meeting with an investor might turn into a pitch meeting. You could meet with investors at one firm two or three times before making a formal pitch to the partners who guard the checkbook. We created an overview of the process of meeting with investors, from first email to after the pitch.
The goals of founders and their investors don’t always align. VCs aspire to return 3X their fund for their limited partners, but what founders want is less straightforward, and can change over time. When these goals get out of line—and they do—things can get ugly fast. Investors can remove founders, block the sale of the company, or hold the threat of these things over founders heads in order to strong-arm the founders into certain decisions. This section helps you understand how such things can happen, and prepare to mitigate those risks.
The idea of “raising money” is euphemistic. To “raise venture capital” means to sell a portion of your company—to sell partial ownership in your company—in exchange for money to help your company grow. These sections cover everything you need to know about how ownership works, and what you need to avoid to maintain meaningful control of your company.
This updated chapter is like a gift certificate for legal advice. Lead author (and Holloway CEO) Andy Sparks spent many hours speaking with multiple startup lawyers and VCs, reconciling their (at times diametrically opposed) expert opinions on what makes a good term sheet. This section will be most helpful to founders actively negotiating term sheets, when you’re expected to master more than fifteen complicated legal terms in a matter of hours. Even if you have a great lawyer, the minute you get off the phone with them you’re likely to forget half of what they told you. This chapter will help you have more informed, effective discussions, saving you significant amounts of money when you consult your lawyer and negotiate with investors.
When it comes to raising money for an early-stage company, the priced round vs. convertible instrument debate is one of the more heated issues. This improved section showcases multiple perspectives on the strengths and weaknesses of both priced rounds and convertible instruments so founders can make educated decisions about financing structures. This section has also been updated to reflect recent changes to the Safe, and has been reviewed by expert startup lawyers.
We’ve added tooltips to our infographics, so now when you hover over them with your cursor you get additional depth from the data.
We’d love to hear what you think about release notes, the changes to the material in the Guide, and anything else you’d like to tell us at firstname.lastname@example.org.