Tim Marman's Loosely Coupled

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• Serial Entrepreneurs and High Valuations

  I wrote in the past that sometimes you can take too much money - doing so creates certain expectations for an exit that might not be achievable and limits your flexibility. In the context of the discussion last week, I think it's important to highlight that these economics are not always the fault of the venture capitalist. For example, Jason Calacanis said you should take as much money as you can get and Marc Andresseen said “ in general, [you should raise] as much as you can ”. Billions or Bust Another one of my favorite recent examples is Slide, founded by Max Levchin of PayPal fame. Slide recently raised $50M from T-Rowe Price and Fidelity - giving up 9% for a pre-money valuation of roughly $500M. Granted, T-Rowe Price and Fidelity probably aren't quite expecting the same kind of returns over the same time frame as a VC, but it still sets a ridiculous high floor for an exit. That is, in part, the plan. As Sarah Lacy put it , "Levchin, who co-founded and later sold PayPal... Posted Jun 09 2008, 09:06 AM by Tim with | with no comments Filed under: Web 2.0, Business, Entrepreneurship, Startup, Venture Capital, NextNY

• Facebook: Lawsuits, IPOs, and Acquisitions

  ConnectU is suing Facebook for, among other things, copyright infringement, breach of contract, theft of trade secret. (It should be noted that Facebook is counter-suing for business torts and unfair business practices). ConnectU (which started at Harvard Connection) alleges that Mark Zuckerberg was brought on as a member of the ConnectU development team, given access to the existing code base and business plans, and eventually "stole" them. For more details, read the full set of complaints and other filings . Rob is wondering why no one is covering this lawsuit ... it's certainly a big deal given the recent valuations and talk of an IPO. As Mike Arrington notes , "this isn’t a case of plaintiffs looking for a quick buck as billion dollar valuations are discussed" - this is actually a long-standing dispute that commenced long before we were saying "Facebook" and "billions" in the same sentence. Facebook recently acquired Parakey , a as-yet-launched... Posted Jul 24 2007, 07:19 AM by Tim with | with 1 comment(s) Filed under: Web 2.0, Business, Microsoft, Google, Startup, Venture Capital, Facebook

• What's the best state to incorporate in? (Hint: Delaware)

  AskTheVC recently addressed the question of what was the best state of incorporation . The short answer is one of 3 preferred states: "Delaware, whatever state the company is in and whatever state(s) the VCs are located in." Obviously, the last is hard to determine if you're going to incorporate before you close financing. California is notoriously employee-friendly so it should be avoided. Some of those laws may still apply if you are based in California, but if you are elsewhere you should definitely assume those burdens. New York is also undesirable. It's fairly balanced when it comes to dealing with owners vs. employees, but the one big red flag is Section 630 of the NYS BCL. This section states that the top 10 shareholders are liable for employee wages if the company goes out of business and employees aren't paid. This statute does not apply to foreign companies (i.e., those incorporated in other states) even if they're doing business in New York. Considering... Posted Jul 23 2007, 05:53 AM by Tim with | with 6 comment(s) Filed under: Web 2.0, Business, Law, Entrepreneurship, Startup, Venture Capital, NextNY