It’s no secret that many activist investors are frustrated with the lack of financial literacy among entrepreneurs today. In my own battle against the blank face in the boardroom, I’ve been following the work of Brad Feld, Jason Mendelson, and Fred Wilson (in addition to asking some of our great investors questions directly).
Some of these online works can be a little overwhelming, however, with Fred Wilson’s MBA Mondays alone returning over 90 posts. Here are a few places to get started — followed by some additional resources I’ve found useful.
Brad’s professorial writing style explains the context around numerous accounting mechanisms and why they matter. Brad will get you thinking about the big picture before you dive into vocabulary.
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- Setting up your accounting system
- Balance sheet and cash flow overview
- Financial statements (examples, annotated)
- Revenue projections (and why to make them).
Jason Mendelson’s Convertible Debt Series
Convertible debt (and convertible equity) is popular for seed stage companies in Silicon Valley. Jason’s series will help you get comfortable with the levers behind most seed stage negotiations.
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- Conversion mechanics
- Conversion in a sale of the company
- Misc. terms
- Warrants
- Early vs. late stage dynamics.
Don’t forget to plan for success! Get familiar with what a term sheet looks like before you get one.
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Fred’s posts are among my favorite. Not only does he share concrete examples, he uses simple terms to get you familiar with almost every major financial metric that will have an impact on your business. I even printed Fred’s posts and annotated them rigorously until I understood how everything fit together.
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