Tytus Cytowski

Check out this article from Carta on venture deal terms featuring some quotes from yours truly.

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CRV's recent decision to return $275M from its later-stage Select Fund highlights the growing caution around inflated valuations. As capital becomes more selective, this move signals a recalibration, especially for late-stage startups where liquidity is tighter and exits are delayed. While this news centers on a later-stage fund, we may also see new early-stage funds raising less capital going forward. With a more conservative approach across the board, founders at all stages should expect increased scrutiny and a more measured funding environment in the near term. https://lnkd.in/grG7u_KK

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Data and observations on recent trends in VC deal terms. Along with more "structure" (participating preferred, multiples on liquidation preference, and cumulative dividends), pre-money valuations have dropped significantly more and not recovered in later stage deals but early stage deals are much closer to 2022 pre-money values & raise sizes. https://lnkd.in/g2kcxznr

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Unposted Venture Capital Fund Formation Gig in Silicon Valley: -Premier VC fund formation group adding 2022 and 2023 grads -Need to sit in Silicon Valley given that's the nerve center of the Cali team (not downtown SF) -This crew reps more VC and growth funds than any other law firm globally (> 500 total) -They're responsible for nearly 1/3 of all venture $$ raised worldwide -Ideally want experience in fund formation/private funds at top law firm, but will entertain a pivot in discrete compelling instances -Top market comp -3 days/week in-office -Need is now; will hustle and make the economics make sense for a pre-EOY start As always when I throw something on here, my team and I will get you an edge over competition given our relationship with this group. Ping myself ([email protected]) or Gabriella H. ([email protected]) to discuss confidentially.

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The times are a changing ... and so are the deal terms; read more below.

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Just wrapped up an insightful few days at Legal Innovators California, focusing on AI/LLM in legaltech. Key takeaways: - AI is poised to disrupt the legal practice imminently. - Growing interest in automating routine tasks like SaaS contracts and NDAs. - Cyborg solutions, integrating humans for quality control, are being launched in legal services today - RAG is intriguing but not foolproof for precision in legal matters (very different from creating marketing copy for TikTok) I'm excited about the concept of autonomous agents negotiating contracts and streamlining core issues for human attention - a game-changer! Looking forward to more developments in this space! Lauren Bonner Jonathan Jetmundsen Juristat #LegalTech #AI #Innovation #LegalInnovatorsCalifornia

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Good morning from sunny Silicon Valley! Despite a consistent slowdown, global venture capital investment held its ground this April, with a total of $22 billion in funding. Here are some points we can learn from last month's data: 🔹 Seed-stage companies saw $2.4B distributed among 1,000 startups, highlighting continued interest in early innovation. 🔹 As for mature startups, over $10.7B was allocated to more than 150 Series C and beyond companies. 🔹 Biotech and healthcare led the funding race with $5.7B, representing 26% of the total investments. AI followed with notable advancements, including a notable $1B funding round. 🔹 The IPO scene showed signs of warming up with significant entries, signaling a cautious yet optimistic outlook towards receptivity within the public market. 🔹 Generative AI is continuing to shape the landscape, benefiting established tech giants and new companies alike, and emphasizing the transformative potential of AI across sectors. As we move forward, these trends will likely dictate the pace and direction of innovation, making this an exciting time to be involved in the tech and venture capital space. Check out this Crunchbase article for more - https://lnkd.in/gk_HD2xf #mergersandacquisitions #venturecapital #innovation #artificialintelligence #fintech #techlaw #foleyforward #garage2global Foley & Lardner LLP

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Great summary of the differences.

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Tech startup founders: is your New Year's resolution to get on the path to unicorn status? 🤔 For those not in the know, a unicorn is a startup company valued at over $1 billion. 🦄 As a patent attorney who has been fortunate to work alongside companies who went from seed stage to $1 billion plus valuations, I have learned a few things about developing patent portfolios in order to grow a company's valuation. 📈 This carousel explains why you might want to build a patent portfolio and how to achieve some common portfolio goals! 🥅 🙌 #StartupPatentThursdays #patentportfolio #startup #patent #IP

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Good morning from sunny Silicon Valley! 1 out of every 3 VC dollars globally went to AI startups in 2024. In North America, nearly 1/2 of all VC funding poured into the AI/ML vertical, with global investment surging 50% to $131.5B, according to PitchBook data. This historic funding wave clearly shows AI’s dominance in the VC space, but it also raises questions about issues such as sustainability and focus. Are we allocating capital to the right opportunities, or simply getting caught up in the hype? In 2025, the key to success will likely be focusing on real-world applications and sustainable growth opportunities. And for investors, success will likely depend on their ability to cut through the noise, allocate capital thoughtfully, and find value beyond just the foundational layers of AI. More on this data here - https://lnkd.in/gQdezQvP #mergersandacquisitions #siliconvalley #innovation #artificialintelligence #machinelearning #venturecapital #ai #foleyforward #garage2global Foley & Lardner LLP

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The number one question first-time founders ask about how to raise VC is HOW DO I DO IT? They say, if I’m a first time founder with no contacts, and no one in my network knows any VCs How do I raise VC? If you want this question and more answered, check out the new SaaS Buyers’ Club episode with Morgan Polotan. In episode 49 of SaaS Buyers’ Club, where I interview the brightest minds in SaaS with a mission to help SaaS founders increase their exit value Morgan and I discuss: - How Morgan went from being an actor to becoming a self taught software engineer to becoming a VC - How Morgan worked in VC with Bloomberg Beta and Monashee - How founders know whether they’re a venture back-able business - The difference between private equity and VC - Effective fundraising strategies - Understanding term sheets The episode is now live on YouTube, Spotify, and iTunes.

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LET THE INVESTOR SPEAK, part 1: "Find yourself a person who asks questions that hurt, and who pushes you to care about the dead boring stuff." That's Raoul Dobal's advice on how to spot the perfect investor and board member. As an angel investor, active board member and CTO of PMG Investment Solutions AG, Raoul is ready to get his hands dirty and to serve as an active and committed board member in the startups he invests in. It's also the best way for him to make sure his investees will succeed: giving them an experienced and hands-on support, and making sure the nitty-gritty aspects of growing a company are not neglected. We're talking compliance, data security, HR strategy, and the legal setup. Because while building an awesome product might be the most activating thing to do, setting the reliable groundwork is what's going to help limit future risk. As a startup that got ISO-27001-certified in its first year of existence, we at Neur.on couldn't agree more. In our case, legal and banking clients are only working with us because we can prove how secure our data flows are. That's super boring stuff. Until it isn't. ---------- In the ongoing series "Let the investor speak", I'll showcase personal insights from investors all across the board to help you diversify your search for an angel investor or VC company.

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Down rounds do not have to be a death knell and in fact, in certain markets getting funding at any valuation should be considered an accomplishment. You likely have competitors who could not raise funds at any price. A few things that are really important in terms of moving past a down round: 1. Limit collateral damage. VCs will often require other investor friendly terms in connection with a down round. You want to make sure these terms are not so off-market that they impede future fundraising. 2. Options may be significantly under water or less valuable. Through regrants or bonus schemes, keep your important employees motivated. 3. When large corporations know they will experience a significant earnings miss, they often will use it as an opportunity to surface other bad news and incur restructuring expenses. The point being, get all the bad news out of the way and baked into the lower stock price and have essentially a clean slate on which to move forward. For ventures, down rounds represent a similar opportunity. This is the time to address festering problems, streamline costs and incur the costs of restructuring if that will better position the company for future success. Within limits, a down round can give venture management a bit of a "free pass" to right the ship.

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Tech startups that are C-corporations, and their investors, often ask, "should the startup issue a K-1 to its investors?" The answer is no. C-corporations do not issue K-1s. If a tech startup has done a Series A (or B, C, etc.) priced equity round with institutional venture capital investors, it's probably a C-corporation. K-1s are IRS tax forms that some flow-through entities (such as some LLCs) issue to their members. This is an accounting and tax issue, so if your tech startup is a pass-through entity (if a tech startup is a pass-through entity, it's typically an LLC), working with an accountant with partnership tax experience is a good way to get K-1s issued as needed.

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"𝗦𝗹𝗼𝘄 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗱𝗲𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁: Funds in the 2022 vintage have deployed about 43% of their committed capital at the 24 month mark, the lowest share of any analyzed vintage. Prior vintages ranged from 47%-60% after 24 months." If you want some basis for optimism in 2025 and 2026 for early stage ventures this may be it. The reduction in deployment likely reflects a combination of increased reserves for follow-on and increased investment selectivity. However, venture funds typically have 5 year active investment periods, after which they can only do follow-on investing. Many 2021 and increasingly 2022 funds are going to enter into the final 18 months of that period shortly. For many funds this will be a use it or lose it period. Among other things, the deployment during this period will often impact management fees for the balance of the fund life. I would not be surprised to see a significant increase in new investments by funds with one eye on the calendar. That may require a loosening of the standards.

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Check out this article from Carta on late-stage venture deals which I contributed to. Crowell & Moring

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Founders, if the incentives aren't there for you to sell your company, no amount of wishing will make one happen. Here's a cautionary example: I worked with a startup that had raised money, had product-market fit but couldn’t get their overall unit economics to work as planned. The founder couldn’t secure more financing and, running out of cash, managed to negotiate a deal that would partially pay back investors. But here's where it gets messy. The deal was predicated on the founder's enthusiastic participation in the company post-acquisition. Yet the founder was set to receive zero proceeds from the deal, and the buyer wasn't willing to offer competitive go-forward compensation. Seeing this, the founder proposed a "carve-out" of the investor proceeds—essentially a bonus for making the deal happen—to true up a bit of the lower salary. Some investors, already facing a loss, were unwilling to agree to a meaningful carve-out, leaving the founder with very little economics in the transaction. With no real upside, the founder's enthusiasm waned. Who would be excited about working hard post-acquisition for essentially nothing? The buyer sensed this, and it became a major sticking point to getting a deal done. The buyer eventually walked away over the founder's apparent disinterest. And those investors who fought against the founder getting any compensation? They ended up with nothing. The lesson here is clear: Taking care of yourself is not selfish; it can be a necessary part of delivering a return to others. That’s why it’s important for founders to advocate for their interests. If you're not excited about a deal, chances are it won't succeed anyway. #Startup #Founders #VentureCapital #Entrepreneurship

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