In this episode, Hall welcomes Daniel Hallawi of KapVista, a global platform showcasing emerging companies across 15+ countries to over 15,000 high net worth, professional, and international investors. Through an investor-focused website and tailored matchmaking, private companies can present their company to potential investors, advisors and board members. As a natural by-product, KapVista also provides a marketplace to find potential co-founders, team members, advisors, board members and individuals who can help grow the start-up ecosystem.

After leaving a successful career in the corporate world, Daniel became fascinated with the startup world. Daniel created KapVista as his response to the massive disconnect between founders and investors. He found that there was nowhere to go for founders to connect to the resources they needed to grow.

Daniel talks about what he looks for in a founder. He encourages startups to be laser-focused on investors from day one–and realize that the little things such as punctuality and follow-through matter. Daniel highlights the evolution of the VC and Private Equity space, as well as the increased competition both for investors and startups. Finally, Hall and Daniel discuss some of the hot sectors, both in the U.S. and Asia.

Terms sheets use anti-dilution clauses to protect the investors. Anti-dilution comes into play during down rounds in which the founders raise funding at a lower valuation than a previous round. There are three scenarios:

No Anti-Dilution Protection - Investors and founders share in dilution from any follow on rounds funding.

Full Ratchet Anti-Dilution - With full ratchet, the investor’s share price is adjusted all the way down to the level needed so that two things happen:
a. The new investor gets their percentage.
b. The current preferred share investor with full ratchet anti-dilution protection maintains their ownership percentage in the startup,
A full-ratchet scenario dilutes founders ownership dramatically, so this method is unfavorable to founders.

Weighted Average Anti-Dilution - The Weighted Average method takes into account the total number of shares outstanding. The more shares owned by an investor, the less dilution they receive. This method is favorable to founders. Founders get diluted, but not as much as in a full ratchet scenario. Preferred share investors get diluted a little bit, as opposed to not at all in a full ratchet scenario.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!