welovefounders is a  European early-stage SaaS B2B venture capital fund on a mission to support a new generation of European founders with global ambitions.

We invest €500K to €1M in sparking founders. 

Bold founders, welcome home. 

Apply here: https://welovefounders.fillout.com/grow

welovefounders

𝗕𝗲𝘆𝗼𝗻𝗱 𝘁𝗵𝗲 𝗕𝘂𝗰𝗸𝘀 #6: 𝗧𝗵𝗲 𝗟𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗶𝗼𝗻 𝗣𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗧𝗿𝗮𝗽

Liquidation preferences are a standard feature in the term sheets of venture capital deals, yet they can become a significant trap for unwary founders.

This term dictates the payout order in a sale or dissolution of the company, potentially steering the bulk of returns to investors before founders see a cent.
Imagine a startup where investors have injected $10M for a preferred equity stake, with a 2x liquidation preference. In the event the company is sold for $15M, these investors would receive the first $20M (2 x $10M), effectively leaving nothing for other shareholders unless additional funds are recovered.

🚩 What should you watch out for?

Understand the Multiples: Terms like "1x", "2x", or even "3x" can define how much capital investors get back before anyone else gets paid. A higher multiple can make it harder for founders to see returns.

Participate Fully: Ensure that after receiving their preference, investors convert their preferred shares to common to participate in any remaining proceeds. Without this, you could end up with nothing even if your company sells for more than the investment.

Cap Table Impact: Liquidation preferences impact how much money everyone gets when your company exits. Make sure your cap table reflects this reality, so you don't end up surprised.

Negotiate Terms: If possible, negotiate these terms. Especially if your company is in a strong negotiating position, you might get better terms.

Liquidation preferences are crucial for protecting investors, especially in riskier ventures, but they can severely dilute founders' payouts in exit scenarios.

Like any game, the rules of liquidation preferences are crucial: understand them fully to play effectively.

Let's discuss how to balance investor protection with founder interests. What are your experiences or concerns with liquidation preferences?

Feel free to share your thoughts or questions below! 🔄

#VentureCapital #Investmentterms #Liquidpref #startup #founders

𝗕𝗲𝘆𝗼𝗻𝗱 𝘁𝗵𝗲 𝗕𝘂𝗰𝗸𝘀 #5: 𝗪𝗵𝘆 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗦𝗵𝗼𝘂𝗹𝗱 𝗛𝗮𝗿𝗻𝗲𝘀𝘀 𝘁𝗵𝗲 𝗛𝗮𝗹𝗼 𝗘𝗳𝗳𝗲𝗰𝘁 𝗪𝗶𝘀𝗲𝗹𝘆

In the world of VC investments, the halo effect occurs when one impressive aspect of a startup leads investors to view the entire venture more favorably than it may deserve.

This cognitive bias can cause investors to overlook or underestimate other critical aspects of the business that should be carefully scrutinized.

Key Biases That Can Cloud Investor Judgment:

- Founder’s Charisma
- Impressive Educational Background
- Affiliation with Prestigious Universities or Accelerator Programs
- Previous Successes
- Media Attention or Industry Hype
- Strong Industry Connections and Networks

How Should Founders Use the Halo Effect (and When to Dial It Back)?

As a founder embarking on your fundraising journey, it’s crucial to sell your vision, your team, and your project in the most appealing way to attract top VCs.
Mastering this game can create significant hype around you and your startup.

While creating hype can bring numerous benefits, such as:

- Attracting top VC interest
- Achieving an oversubscribed funding round
- Boosting visibility for your brand

It’s clear that the halo effect can be incredibly advantageous during your pitch.
However, once you've signed those first term sheets, it's essential to shift gears and embrace transparency.

If VCs invest with an inflated perception of your product’s maturity or your ability to deliver, overpromising can quickly become the main source of conflict.

Pro Tip:

Avoid rushing to VCs who offer the best terms and highest valuation without taking the time to truly understand you and your business, driven only by FOMO.

Instead, seek out VCs with whom you can build a strong partnership based on trust and collaboration. Good investment decisions take time, and fostering meaningful relationships with your investors will always pay off in the long run.
Share your experiences and thoughts on how the halo effect has impacted your journey. Let's discuss how we can all navigate this tricky terrain more effectively!

🚀 Disclaimer du Jour: The stories below are sprinkled with humor and a pinch of skepticism. Always consult your investment advisor, bartender, or even your cat before making any impulsive decisions based on a charismatic pitch!
What is the Halo Effect?

#VentureCapital #Founders #Startup #Haloeffect #Investment

𝗗𝗮𝘁𝗮𝗿𝗼𝗼𝗺: 𝗦𝗵𝗼𝘄𝗰𝗮𝘀𝗶𝗻𝗴 𝗣𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹𝗶𝘀𝗺 𝘁𝗼 𝗩𝗖⚡️✌️

When you're diving into the thrilling world of fundraising, your dataroom is like your armory—it needs to be well-stocked and organized to battle for investor interest.

I’ve listed with the help of my fellow colleague Louis Henne a list of documents you need to have easily accessible. It’s a lot of upfront time, but it will save you a ton later in the process.

A chaotic data room not only frustrates investors but can break your chances of securing that crucial investment

💡 Tips: you can have 2 types of dataroom: Full VS Light

I suggest sharing a light dataroom version with VCs during their initial analysis of your startup, without any commitment. Once they sign the term sheet, you can provide the full version.

Did we forget something ?

#VC #fundraising #dataroom #professionalism #startup #capital

𝗕𝗲𝘆𝗼𝗻𝗱 𝘁𝗵𝗲 𝗕𝘂𝗰𝗸𝘀 #𝟰: 𝗪𝗵𝘆 𝗬𝗼𝘂 𝗦𝗵𝗼𝘂𝗹𝗱 𝗖𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗕𝗼𝗼𝘁𝘀𝘁𝗿𝗮𝗽𝗽𝗶𝗻𝗴?

Because bootstrapped startups are the sexiest for VCs.

First, back to basics.

Bootstrapping is the startup equivalent of DIY furniture assembly: sure, it might wobble a bit, but it’s your wobble.
You build a startup with the goal of it being self-sustainable from day one, and that’s great!

The reason we hold bootstrapped startups in such high regard is because they reveal a great deal about their founders.

𝟭. 𝗧𝗵𝗲𝘆 𝗰𝗮𝗻𝗻𝗼𝘁 𝗽𝗿𝗲𝘁𝗲𝗻𝗱 𝘁𝗼 𝗸𝗻𝗼𝘄 𝘁𝗵𝗲𝗶𝗿 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀

Without piles of cash to solve problems, you actually had to spend a lot of time talking to your customers to truly get their needs. Most of the time, without earning a single euro!
This statement is also the answer to the first VC question: “Do you genuinely address a market pain point?”

𝟮. 𝗖𝗿𝗲𝗮𝘁𝗶𝘃𝗶𝘁𝘆 𝗶𝘀 𝗯𝗲𝘁𝘁𝗲𝗿 𝘁𝗵𝗮𝗻 𝗰𝗮𝘀𝗵

Marketing budget? Paid acquisition? Paid referrals? 🤯
Tight budgets often mean growth may be slower, yet they underscore the dedication to refining customer acquisition strategies and the necessity to build some hacks to convert effectively.
If you’ve mastered the recipes without VC cash, what the hell could you do with it?

𝟯. 𝗧𝗵𝗲𝘆 𝗮𝗿𝗲 𝗻𝗼𝘁 𝗩𝗖-𝗱𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝘁

Naturally, they operate their business and generate profits without relying on venture capital.
That's precisely why we admire them!
Let's face it, investing in a startup that utilizes funds to replicate a successful model is a means of mitigating our risk.
If they choose to approach us, it's indicative of their readiness to scale.
In such instances, venture capital becomes a strategic partner.

Yet, certain industries operate on a "winner takes all" principle, demanding rapid scaling and substantial expenditure.
In such scenarios, fundraising appears to be inevitable.

All in all, when you bootstrap your startup, you might trade growth for control.
However if you can achieve big numbers, you become the company that many investors are eager to invest in! And welovefounders will be on your list!

🚀 Disclaimer du Jour: The thoughts below are mine alone and have the scientific backing of my university chemistry grade (which was not an A, I swear). Read, enjoy, and consult your dog before implementing any advice.

#bootstrapping #freedom #entrepreneurship #startup #productmarketfit

Thanks Insight Matters for the visuals. 

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We Love Founders is a venture capital firm that partners with entrepreneurs to build and scale technology companies. They provide early-stage funding, strategic guidance, and operational support to founders, with a focus on creating long-term value.

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