One of the ways to finance a company is to raise venture capital. While only a small percentage of companies raise venture capital, many of the great technology companies that have been created, including Google, Apple, Cisco Systems, Yahoo!, Netscape, Sun Microsystems, Compaq, Digital Equipment Corporation, and America Online (AOL) raised venture capital early in their lives. Some of today’s fastest-growing entrepreneurial companies, such as Facebook, Twitter, Airbnb, LinkedIn, Fitbit, and Uber were also recipients of venture capital.
Over the past 20 years we’ve been involved in hundreds of venture capital financings. A decade ago, after a particularly challenging financing, we decided to write a series of blog posts that would demystify the venture capital financing process. The result was the Term Sheet Series on Brad’s blog (www.feld.com/archives/category/term-sheet), which was the inspiration for this book.
As each new generation of entrepreneurs emerges, there is a renewed interest in how venture capital deals come together. We encounter many of these first-time entrepreneurs through our activities as venture capitalists at our firm Foundry Group (www.foundrygroup.com), as well as our involvement in Techstars (www.techstars.com). We have been regularly reminded that there is no definitive guide to venture capital deals and as a result set out to create one.
In addition to describing venture capital deals in depth, we’ve tried to create context around the players, ...