Blue Apron's been good, but takes way too long for us to cook. I highly recommend you look into Gobble (http://www.gobble.com) which is as healthy, much quicker to make, and the recipes are delicious.
Garry, Alexis, and Initialized have been extremely helpful and hard-working investors in my company for ~5 years. I love that they're founders themselves, which means they know what it takes and they work really hard to help their portfolio companies. These are the investors you want on your side, particularly when you run into road bumps. I highly recommend them as investors, and I'm happy to answer any questions (my email is in my profile).
I had the privilege of meeting Andy Grove a few years ago after he expressed interest in learning what our startup was doing to advance medicine. At the time, he was already clearly suffering the physical effects of Parkinsons, but mentally he was completely with it.
He listened without saying a word for ~15 minutes while I explained what our startup does. Then, he began "If I were you, I'd..." and proceeded to tell us specific ways he thought we could better focus our business. His advice was relevant and demonstrated a crisp understanding of our business and many of the challenges we'd face over the next several years.
My natural inclination was to jump in and start pushing back, but I just stop and decided to listen and learn from this business legend. I left extremely impressed. Even today, several years later, we're still executing on many things he foresaw after a brief interaction.
Strange -- about the same timeframe, already with Parkinsons, a flagship neuroscience lab in Oxford also tried to approach him for research money. Without success.
The other major issue with convertible notes are that entrepreneurs can end up giving away a lot more of the company than they realize. For example, if the company does a priced round with a pre-money valuation less than the cap (or with uncapped notes, less than expected.)
The median pre-money Series A valuation for all WSGR startups is ~$8.0m [1], which is likely on the higher end.
Also, uncapped notes do not get diluted when raising your Series A, which is additional dilution for the entrepreneur.
For example, let's say you raise $5m uncapped notes with no discount. If you then raise a $3m Series A at a $8m pre-money valuation, you'll end up giving away more than 50% of your company, not counting interest or option pool. At a $15m pre-money valuation, you'll be giving away over 40% of your company.
Entrepreneurs should be equally careful with SAFEs.
If you raise $8M in funding and your company is only valued at $11M, then you deserve to own less than 50% of your company since investors could have done almost as well sticking their money into a bank account.
I don't think the numbers given in your example are particularly realistic. Series A rounds are almost never smaller than seed rounds and are usually at least 3x - 10x.
My point is that entrepreneurs can get into jams inadvertently.
If you raise $2m or $3m on uncapped, no-discount notes, you basically need to turn that into a $10m+ pre-money company upon raising your Series A. If you raise $4m or 5m+ seed, it gets even harder. And this is assuming no cap or discount, which is unlikely.
You are correct that Series A rounds are usually not smaller, in which case if you raise several million seed on uncapped notes and cannot leverage that into a much more valuable company, you'll be unable to raise a Series A.
This is all manageable by the entrepreneur, but it's important to make sure you understand what's happening and where the risks are. It seems a lot of entrepreneurs don't.
If you raise $3M on a note, you're already implicitly valuing your company at $10M - $15M since since each round is meant to take roughly 20% of your company. Investors wouldn't give you $3M unless they thought your company was worth $10M already and you wouldn't take it unless you thought there was a decent chance of bring your company to a 30M valuation by the time the money ran out.
There is no written rule that says "each round is meant to take roughly 20% of your company", and a company is never guaranteed another round. I know several entrepreneurs who have been given term sheets for over 50% of their company. Or no term sheets at all.
There is no "rule" about implied valuation either. Entrepreneurs can raise $3m in notes $100k at a time, usually from investors that are much less price-sensitive than VCs leading a priced round. It's a lot harder to raise a priced Series A at a $10m+ valuation than raising piecemeal notes at the same valuation cap (or uncapped notes, even).
Again, this is all manageable by the entrepreneur, but there are no "rules" like it often appears from the outside.
We use ZeroCater at our office and absolutely love it! Each day we get different food delivered that is catered to our company's preferences. I highly recommend them to any startups!
If the deal doesn't renew in 2015, then there is a five year wind down period where Veeva can sell a limited number new licenses but still use the platform. Presumably if this happens, they'll have to rebuild it. It's addressed in the S1.
I saw the wind-down language but it lacks specifics. I figure there's a slim chance of non-renewal anyway but sometimes these things get awkward.
Interesting thing about Veeva is that unlike every other saas company on earth, they actually have a healthy operating margin despite being in hyper-growth mode. This will close on the first day of trading with a $4.5 billion enterprise value.
Instead we should try thinking of them as pairs of what you're going to build, plus the unscalable thing(s) you're going to do initially to get the company going.
This is probably the most important thing a new entrepreneur needs to realize. Envisioning a world where everybody is using your product isn't enough. You need to figure out how to get to that world from this one, and that is where many entrepreneurs don't have a strategy, and subsequently fail.
