Performance Execution Group LLC (PEG)’s Post

Mastering VC and PE Lingo: Key Terms You Need to Know Understanding the terminology of Venture Capital (VC) and Private Equity (PE) is essential for entrepreneurs and investors alike. Here are some critical terms to get familiar with: 1) Angel Investor: An individual providing early-stage financial backing, often coupled with industry insights and mentorship. 2) Burn Rate: The speed at which a company depletes its cash reserves, expressed as monthly or yearly figures. 3) Cap Table: A breakdown of the company’s ownership, showing who owns shares and their types, along with shareholding percentages. 4) Convertible Note: A debt instrument used in early-stage financing, convertible into equity at specific milestones or events. 5) Liquidation Preference: A right of preferred shareholders to receive proceeds from a liquidity event before other shareholders. ----- Follow All Chance to learn from more innovative insights

A VC firm's job is to find winners early. That means making big bets on high-potential founders, technologies, business models, and industries. Funding rounds from VCs help other investors and corporates value companies based on their potential rather than their current financials. If you’re a growth equity investor pitching a VC-backed company, or a corporate investor/acquirer trying to work with a VC-backed company, understanding the relevant VC comps is critical for your decision making. Grata COO Nevin Raj breaks down the best ways for investors to use VC and growth comps to value private companies here: https://hubs.la/Q02RTDf30 #privatemarkets #privatecompanies #venturecapital #growthequity #valuation

What would your ideal investor look like in a world governed by your desires? "First-check through the door? Whatever pays for the runway? Those who backed a competitor of yours? The guys down the road - Why bother? Anyway, let's close this round and get back to work?" The best founders cherry-pick their investors. They select them as much as they select their co-founders. And so should you! If not, you can always call me when things get messy to find a "mutually beneficial way out" - and, as the case may be replacement capital. That's what I do. And you have no idea how big my TAM, SAM, and SOM are. 🤩

Every business has its own path, and the journey from idea to IPO is a challenging yet exciting adventure I’ve personally experienced. It all starts at the pre-seed stage, where an idea sparks innovation and fuels motivation. From my experience, understanding how each stage of development impacts your ability to raise funds is critical to success. As your company grows, funding options expand, and the cost of capital decreases. Early on, though, risks are higher, and finding the right investors becomes crucial. This is where we, as investors, come in. ⁉We don’t just provide capital—we bring strategic guidance, mentorship, and a network of connections to help founders refine their vision and reach their goals. A successful IPO isn’t the end—it’s a milestone that validates the hard work and resilience of the team. It’s proof that with the right mix of strategy, support, and perseverance, even the boldest dreams can come true. ⁉ Long story short: the journey to IPO is about belief—in your idea, your team, and the process. It’s a rewarding challenge worth every step.

An LP I know was shocked–shocked!–to learn that VC board members aren't actually correcting their portfolio companies when they go astray. Here's why... LPs (Limited Partners) are where the VC's money comes from. They are either wealthy individuals, or also professional investors (fund of funds, endowments, pension funds, etc). VCs pitch LPs on their "value add" and uniqueness, just like any other pitch. And just like any other pitch, a lot of it is marketing fluff. Here's the translation. "We find the best companies through our unique deal flow" = we go to YC demo day and overpay like everyone else. Also, we reach out cold on angel list. "We are active investors who help founders find great talent" = we have an email list we blast from time to time about full time roles, and a handful of fractional people we recommend. "We are helpful board members, guiding our founders to successful exits" = we show up to board meetings and sometimes read the packet. But we'll never tell a founder/CEO no because we don't want a bad reference for future founder/CEOs. "We help founders maximize their exit" = If they're wildly successful, we introduce them to investment bankers that would have been happy to meet with them anyway, and then sign the papers. If they're not successful, we send a few emails and cross our fingers.

Secondaries accelerate the democratization of private equity. Here’s how: With Stableton, we are democratizing access to the most successful pre-IPO companies - Or more concretely, all the Top 20 global tech unicorns in one portfolio. Historically, acquiring shares in a pre-IPO company has not been easy. Investing as part of a capital increase meant building connections with these companies for years and investing tens to hundreds of millions of dollars. ➤ Secondary transactions are the solution to this problem. Put simply, a secondary transaction occurs when an existing shareholder of a company decides to sell to another shareholder. 𝗧𝗵𝗲𝗿𝗲 𝗮𝗿𝗲 𝗺𝗮𝗻𝘆 𝗿𝗲𝗮𝘀𝗼𝗻𝘀 𝗳𝗼𝗿 𝘀𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝗶𝗲𝘀 ▪ Employees are asset-rich, but cash-poor and can get liquidity from their shares ▪Non-traditional investors such as family offices or banks change course or need liquidity ▪Existing VC funds run out of their fund lifetime ▪VC funds want to distribute cash so they can raise their next fund Meanwhile, the buyer gets exposure to a company and sector of the economy that would otherwise be out of reach. 𝗧𝗵𝗶𝘀 𝗶𝘀 𝘄𝗵𝘆 𝗜 𝗰𝗮𝗹𝗹 𝘀𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝗶𝗲𝘀 𝗮 𝗱𝗲𝗺𝗼𝗰𝗿𝗮𝘁𝗶𝘇𝗶𝗻𝗴 𝗳𝗼𝗿𝗰𝗲 Secondaries allow for better portfolio management:  ➤ Secondaries facilitate rebalancing and risk management by enabling diversification Secondaries allow for better liquidity:  ➤ They create opportunities for new investors to enter established companies and provide liquidity options for existing investors Secondaries allow for better transparency and portfolio valuation:  ➤ The vast amount of secondary market trades bring transparency by providing more data points on valuations. As a result: 𝗦𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝗶𝗲𝘀 𝗮𝗹𝗹𝗼𝘄 𝗳𝗼𝗿 𝗯𝗲𝘁𝘁𝗲𝗿 𝗽𝗿𝗼𝗱𝘂𝗰𝘁𝘀 (such as ours): ➤ Such as passive, low-cost, semi-liquid, or open-ended ➤ Appealing to the wealth channel, direct clients, and institutional investors alike. As such far more investors can participate in private market investments. Here is a recap of what we do at Stableton: We provide easy access to the Top 20 global pre-IPO tech companies through a passive strategy with zero performance fees. And because we manage our portfolio through secondary transactions, our fund can be semi-liquid (with 3x the liquidity of ‘traditional’ semi-liquid funds) something almost unheard of in private market investment. You can learn more in the Stableton Navigator newsletter: https://lnkd.in/eG6ufZtT #secondaries #investing #democratization #marketaccess #preipo

Equity management is a cornerstone of startup success, yet it’s an area where many founders stumble. From issuing shares without vesting schedules to misclassifying stock options, ineffective equity management can sow seeds of discord and jeopardize the future of a company. Learn more about the common pitfalls of equity management and gain insights and strategies to navigate this complex terrain successfully. Click here to read the article https://lnkd.in/gsGwkfyn #accountingpartner #cashmanagement #finance #outsourcedaccounting

💸 Looking for higher returns on your investments? The Secret Lies in Pre-IPO Companies (Unlisted Shares) – a smart way to invest early and maximize your growth potential! 🌱 Why Pre-IPO? ✔️ Exclusive Opportunities ✔️ High Growth Potential ✔️ Be Ahead of the Curve 🔗 Invest Early. Reap Big. #PreIPOInvesting #UnlistedShares #WealthCreation #HighReturns #FinancialGrowth #InvestSmart #StartupInvesting #FutureBillionaires #IndiaRising #WealthManagement #FinancialFreedom #SmartInvestments

While most seed investors believe founders should spend their raised cash however they want to, those VCs will still be judging founders’ cash management. © 2024 TechCrunch. All rights reserved. For personal use only.While seed investors generally advocate for founders to utilize their raised funds freely, they remain critical of how founders manage their finances. This scrutiny reflects a balance between trusting founders' autonomy and ensuring responsible cash management. Investors are likely to evaluate the effectiveness of spending decisions, as they impact the startup's growth and sustainability. Ultimately, while flexibility is encouraged, accountability in financial management is a key factor in investor assessments.Executive assistants, high salaries, and other ways early-stage founders will trigger a seed VC

Senior Associates in venture make $178k - $295k per year. Why such a big range? It’s because of how VCs make money to pay their employees. Often times VCs follow the 2/20 structure. 2% management fee on their fund size or AUM to keep the lights on and pay employees. This is given annually. 20% profit share (carry) when their investments exit. This is distributed in 7-10 years usually. Because of this structure, VCs have fixed budgets to pay employees and it is dictated by their fund size. A $10M fund gets $200k a year to keep the lights on. A $100M fund gets $2M. This is why there is such a gap in pay between early stage funds (often smaller) and late stage funds (often larger). Knowing this is important when going into VC comp discussions. For anyone interested in learning how to effectively negotiate VC comp, I wrote about it in detail here: https://lnkd.in/gsWkapXP --- If you found this helpful, reshare to help one other person in your network. Knowledge is power! #venturecapital #compensation