

Should Investors in the Same Round of Financing Ever Get Different Prices? - acgourley
http://www.bothsidesofthetable.com/2012/09/08/should-investors-in-the-same-round-of-financing-ever-get-different-prices/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BothSidesOfTheTable+%28Both+Sides+of+the+Table%29&utm_content=Google+Reader

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tferris
Of course they should.

There're various financial instruments enabling this very well. Simple
question and Dave is totally right while Fred still lives in the past and
ignores the basics of dealmaking.

The first and those who were quick in decision making should pay less than
those who join later the same round. To join a full party is always a safer
bet than being the first guest, so simple.

Investor's reputation/brand/name and their network are other key drivers to
the prices.

There's one exception: when VCs know each other very well and brought
themselves into the round/deal then their good relationship (and potential
other deals running besides) will usually prevent different prices.

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fredwilson
i may be living in the past, but rounds/syndicates are held together by the
glue of price and terms. when you don't have that, there is no round. just a
bunch of investors, like you have in the public markets. you might want the
private markets to behave like the public markets. but be careful what you
wish for.

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jammur
Can you elaborate on this, Fred? What's the benefit of having a round, over "a
bunch of investors"?

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seiji
Tradition, paperwork, the knowledge that you are a beautiful snowflake, and a
big bragging press release?

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001sky
Class. In more ways than one.

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malandrew
Huh? Investors are putting a price on your company based on your fundamentals.
Just like all companies have differing fundamentals, so do investors. Is it
not fair to put a price on their money based on their fundamentals.

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anovikov
My opinion is that yes they should, because there is also non-monetary factor
in what they bring in which is different (while all bucks are equal). This is
not so pronounced with the VCs but try thinking about angels, i would accept
way lower valuation on any product/company i will start from PG than from the
wealthy guy next door who has no idea about what i will be doing.

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fredwilson
you can put those investors on your advisory board and give them some options,
explicitly recognizing them as valuable. this makes your round a lot less
complicated and also allows you to be more concrete that you expect certain
investors to give you value back

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malandrew
I imagine that the market will eventually devise instruments that uncomplicate
a mixed price round.

When a lot of dumb money shows up in the startup/vc market at the beginning of
next year, you'll probably see this happen.

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vasilipupkin
Investor converting into the round at a discount is really an investor in the
previous round, So both Dave and Fred are right The round should have one
price for everyone to make it clean and simple But earlier investors
converting should be thought of as earlier round participants

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captain_spanner
Working at a start up where multiple investors came into the same round at
different valuations; so yes, they should, it makes sense as different people
bring different things to the table.

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JohnHaugeland
A heavy duty well connected investor who is actively making connections and
opening doors should get a better price than a bank whose involvement begins
and ends with a term sheet.

