Mark Suster, a venture capitalist, writes about startups, fundraising, valuations, sales, and founder decisions.
Commenters recommend it for clear explanations of investors and deal terms, and as one of the few good sources on startup sales.
I would recommend you check out a few sites like:
http://www.venturehacks.com
http://answers.onstartups.com
http://www.bothsidesofthetable.com
To answer your questions directly:
1) You generally tell them how much money you are trying to raise (based on your financial projections). The valuation determines what percentage ownership you end up giving up in exchange for the funding. The total amount you end up with is negotiable.
2) The VC takes a percentage ownership of your company, and generally ends up with a seat on your board, Officer salaries are generally determined by the board. As the founder, you usually specify your salary requirements during the fund raising process....an overly large salary is a red flag and could turn investors off. The total amount of control the investors end up with depends on your specific situation.
3) Usually it is done as one big check. However, it may be split up into 'tranches', which are delivered upon meeting certain milestones.
4) Most startups do end up failing, the investors know the risks associated and factor that in their decisions about what companies to fund. If it fails, it fails. The fact that your company is a separate legal entity protects you from personal liability.
5) Generally investors end up taking a 20%-40% ownership stake in your company per round. If you raise multiple rounds, each new investor takes a new slice of the pie.
I would definitely recommend checking out the sites I linked above to get a much…
100% this. I was diagnosed last year (at 33), and it changed my life for the better; specifically, it allowed me to stop being angry at myself every time I did something that was, in fact, a symptom of ADD. Now I had a reason and could work to modify behaviors, as opposed to just feeling guilty and undisciplined.
Mark Suster’s posts were what set me on this track of self-realization (along with my best friend and fiancée telling me to consider it), so I’ll leave them here in case they help anyone else too:
[1] https://bothsidesofthetable.com/how-to-know-if-you-have-add-and-what-to-do-about-it-e8a705765558
[2] https://bothsidesofthetable.com/why-add-might-actually-benefit-startup-entrepreneurs-501b3b323146
[3] https://bothsidesofthetable.com/developing-an-action-plan-for-high-performance-with-add-80e33126840c?gi=af5c11f32cb8
Quit your job. Find another one. Leave your current one off your resume. Mark Suster talks about this here:
http://www.bothsidesofthetable.com/2010/04/22/never-hire-job-hoppers-never-they-make-terrible-employees/
"If you worked somewhere for 6 months leave it out. It’s not worth it. Listing it is a negative and unless it was interning for Ted Kennedy or Ronald Reagan it’s most likely a liability. A resume does not require you to list absolutely everything you’ve ever done. Do not lie. If asked in an interview about the gap you can simply say, “I joined a company for 6 months that was a total mistake. I regretted it. I figured I didn’t accomplish enough to put it on my resume. Trying to make what I did there sound good on a resume would have been false."
Mark Suster has really great info on his blog - though it might be a little more geared towards startups seeking funding: http://www.bothsidesofthetable.com/
A post here on HN from a month or so ago pointed to this blog for a number of great resources: http://www.mattmazur.com/2010/12/17-startup-blogs-to-make-you-a-better-entrepreneur/
Another: http://tappen.posterous.com/nice-summary-stanleytang-256-must-read-conten
Don't forget to keep reading this site - you'll learn much, just try to not get addicted to it!
Finally, start attending startup events - they come in many shapes and sizes and depending on your location you may have more or less to choose from. Checkout startupweekend.org to see if they have any events coming to a city near you.
Chris,
it seems like you are a do-er, which is fantastic, as most people have the other problem of having ideas, and not acting on them.
but you seem to be approaching this w/o sufficient knowledge/experience in business development aka, "theory stuffs".
I highly recommend http://www.mixergy.com to get a well rounded opinions, and anecdotes on startups to get a better feel for the types of things you need to be aware of before/after launching.
keep at it, best of luck.
p.s)
http://www.bothsidesofthetable.com/
http://www.gabrielweinberg.com/blog/
http://paulgraham.com/articles.html
also fantastic places to checkout
As a Co-founder I can attest to the fact that it is a very valuable asset. But with that said, my co-founder and I left our jobs at the same time to start our company and had complementary skill sets. He is the development side of the house and I wear the "biz dev" hat.
There is a really good post by Mark Suster that talks about hiring your co-founder. It is a the best of both worlds in some cases because you get someone that is on the same commitment level, but you don't have to give up all the equity that comes with a 50/50 split.
Here is the link: http://www.bothsidesofthetable.com/2011/05/09/the-co-founder-mythology/