any books teaching entrepreneurial finance

I went to a startup company's fundraising meeting this week. And I do not quite understand the financial part on the fundraising presentation. For example, the second round fundraising will give XX% discounts to the first round investors. What is that discounts and how did the company come up with the number?

Is there a good book teaching entrepreneurial finance from the fundamental? (PS: I do not have a business background.)

Thanks

 
Best Response

Most likely they're talking about a first-round financing that was done as a convertible debt note. The investment is in debt that converts to equity at the Series A (or next round) agreed-upon valuation, but with a X% discount (usually around 25%) for investing early. Convertible debt notes are very popular for seed rounds because the investors don't have to negotiate a valuation (which is difficult to come up with at such an early stage, plus seed stage investors are often not sophisticated enough to give a reasonable valuation), they can leave it up to the next round of investors.

This is cap(italization) table finance, extremely specific to venture capital. The best resources are online, posted by entrepreneurs and vcs. Google around the term "cap table" for blog posts and explanations.

 
moosen:

Most likely they're talking about a first-round financing that was done as a convertible debt note. The investment is in debt that converts to equity at the Series A (or next round) agreed-upon valuation, but with a X% discount (usually around 25%) for investing early. Convertible debt notes are very popular for seed rounds because the investors don't have to negotiate a valuation (which is difficult to come up with at such an early stage, plus seed stage investors are often not sophisticated enough to give a reasonable valuation), they can leave it up to the next round of investors.

This is cap(italization) table finance, extremely specific to venture capital. The best resources are online, posted by entrepreneurs and vcs. Google around the term "cap table" for blog posts and explanations.

Exactly what it is! Thank you so much.

fight for MBB
 

I'd also high recommend venture deals by Brad, as it covers most of the key terms you would encounter as an entrepreneur - the rationale, history, and current practices related to that.

 

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