Redefining dilution

Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor When venture capital becomes vanity capital The plague of rationalization

Everyone generally agrees that dilution should be avoided. VCs insist on pro-rata rights to avoid the dreaded “D” word. Executives often complain, after a new financing, that they should be “made whole” to offset the dilution that came with the new round. Founders work as hard as they can to maximize their valuation at each financing event to avoid painful dilution. Dilution = bad.

And yet, entrepreneurs want to raise money. In many cases, they want to raise lots of money. There is great pride in the amount of money that is raised and a larger raise is typically celebrated as a greater success. This is a bit confusing, given that a larger raise should also mean more of that awful dilution that everyone is trying to avoid.

Financing events are misleading

Most people in the startup ecosystem think of dilution as the percent of the company that is sold in a financing transaction. If your startup completed a $5 million Series A on a $20 million pre-money valuation, (option pool aside) you would have 20 percent dilution, and everyone will own 20 percent less than they did before the transaction. This is very misleading.

While every equity holder may own 20 percent less of the company than the day before the financing, the company is worth more than the day before the financing. Even if you assume that the valuation was an objective measure of the value of the company and was flat from the previous financing, everyone now also owns their percentage share of the new cash that was added to the cap table, which wasn’t part of the company’s value prior to the financing. Here’s an example:

Company Value

Your Ownership

Your Dollar Value

Pre-Series A




Post-Series A




So if you owned 10 percent of the company, and the day before the financing that was worth $2 million, the day aft

Read more:

Trump’s China tariffs could drive up the price of the Apple Watch and Fitbit trackers

A new $200 billion round of tariffs on Chinese goods could have some broader implications for U.S.-based hardware companies. New government rulings on the Trump-imposed tariffs single out a couple of key devices buy name, including the Apple Watch, Fitbit trackers and Sonos speakers.

Products like smartphones have thus far been unimpacted by fees leading to product price spikes, but other electronics could potentially be hit, due to what Reuters deems “an obscure subheading of data transmission machines in the sprawling list of U.S. tariff codes.”

That’s among the 6,000+ codes cited by the White House’s proposed tariffs. That could mean upwards of a 10 percent tariff on popular products, including the Apple Watch, Fitbit Charge and Surge and the Sonos Play:3, Play:5 and SUB.

While Trump reportedly told Tim Cook that Chinese tariffs wouldn’t impact the iPhone, it seems the promise didn’t apply across the company’s product lines.  In order to not be impacted, manufacturers could potentially attempt to have products classified under a different code or apply for an extension.

Trump’s protectionist approach to trade has already impacted some U.S. industries. Last month, Harley-Davidson — a company he insisted would benefit — opted to move production overseas to avoid steep E.U. tariffs, stating that the move “is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the E.U. and maintain a viable business in Europe.”

Read more:

The World Cup led to a record-breaking number of app downloads and consumer spend in Q2

The second quarter of 2018 was another record-breaker for mobile app downloads and revenue. According to a new report this week from App Annie, there were over 28.4 billion app downloads worldwide across both iOS and Google Play in the quarter, up 15 percent year-over-year. That number is even more remarkable because it doesn’t include reinstalls or updates – only new app downloads. In addition, consumer spending in apps was up 20 percent year-over-year to reach $18.5 billion across iOS and Google Play combined.

This is the most money spent in apps compared with any other quarter before, the report notes, topping the prior quarter’s record-breaking $18.4 billion in app revenue, and 27.5 billion downloads.

Much of the download activity in Q2 came from Google Play.

On its app marketplace alone, global downloads topped 20 billion, up 20 percent year-over-year and widening the gap between itself and iOS by 25 percent points to 160 percent. (See below).

This massive download growth is attributable largely to India, says App Annie .

The country was the biggest driver of download growth year-over-year in both absolute values and growth in market share. Indonesia also played a big role in Google Play downloads.

Meanwhile, the U.S., Russia and Saudi Arabia saw the largest growth in iOS downloads.

In particular, Google Play app downloads included growth in categories like games, video players and editors, and – not surprisingly, given the World Cup – sports applications. And on iOS, Sports apps were also the largest driver of global iOS downloads, followed by Finance and Travel apps.

The impact on the 2018 FIFA World Cup on sports app downloads was also highlighted last month by Sensor Tower, whose own analysis found that new installs of the five leading live TV on demand apps offering channels with the World Cup grew 77 percent during the first week of World Cup coverage, compared with the three preceding weeks (excluding the NBA Finals period).

Sports streaming service fuboTV saw the largest impact, growing at a whopping 713 percent and adding 309K new users in the U.S., while Hulu saw the smallest impact at 18 percent growth. Read more:

Tempow’s Bluetooth stack can improve your TV setup

French startup Tempow has been working on improving the Bluetooth protocol at a low level to make it more versatile. The company is introducing a new audio profile for your TV or set-top box.

TV and set-top box manufacturers can license Tempow’s software and integrate new features in their devices. It works with regular Bluetooth chips, but it opens up new possibilities.

In particular, Tempow has been working on a one-to-many pairing model. You can pair multiple Bluetooth speakers with your TV to create a wireless surround system using good old Bluetooth speakers.

The reason why soundbars slowly replaced 5.1 systems is that you don’t have to run cables on the floor to the back speakers. Tempow solves that, and Bluetooth speakers are much cheaper than a bunch of Sonos speakers.

With Tempow’s stack, you can also stream different audio tracks to different devices. In other words, you could pair multiple headphones with your TV and watch a movie in different languages. If your kid is too young to read subtitles, you no longer need to make compromises.

You can also configure each speaker individually so that you can reproduce the same sound profile across the board, even if you’re using speakers from different brands.

The startup first worked on an audio profile for smartphones. For instance, if you have a Moto X4 phone, you can pair it with multiple Bluetooth speakers at once. With today’s news, the company is expanding beyond smartphones. But it’s still about Bluetooth.

Read more:

Prices for Disrupt SF 2018 passes increase in a few days

There isn’t a business person alive who doesn’t appreciate an advantage, but sometimes folks need to be reminded of an advantage that’s staring them right in the face. This is that reminder. Your opportunity to save up to $1,200 on passes to Disrupt San Francisco 2018, which takes place on September 5-7, comes to an end on July 25 at 5 p.m. PST. Why pay more? Go buy your passes today.

Disrupt SF 2018 is the place to be if you’re at all interested in tech startups. Whether you’re a founder, an investor, a marketer or a job-seeker, you’ll find plenty of inspiration, opportunity and blow-your-mind technology at Disrupt. And this year, we’ve gone all-out to produce our biggest Disrupt event ever.

What’s that mean? Well, take Startup Battlefield for example. We’ve upped the ante on the world’s best startup pitch competition by increasing the prize money to $100,000 in non-equity cash. Yeah, we did. You know the battle will be even more fierce, exciting and epic.

It also means we’ve tripled our floor space by moving the party over to Moscone Center West. We expect a minimum of 10,000 attendees, and you’ll find more than 1,200 outstanding startups and exhibitors showcasing an incredible array of technology on our show floor in Startup Alley.

Disrupt is famous for the quality of its speakers and (shameless brag) we’ve outdone ourselves this year. We’re offering more than 40 presentations, and here’s just a taste of what you can expect: Whitney Wolfe Herd, founder and CEO, Bumble; Reid Hoffman, partner, Greylock; and Dara Khosrowshahi, CEO, Uber. Check out the full speaker lineup here.

If you want to dig even deeper, you can check out the full Disrupt San Francisco 2018 agenda.

We also wanted our hackathon to reflect the grandeur of this year’s Disrupt. How’d we do that? By going virtual — and global. Thousands of the best hackers, developers, designers and programmers around the world can compete in our Virtual Hackathon. The application for submitting a hack is August 2. If you want to compete, sign up right here, right now.

Disrupt San Francisco 2018 takes place on September 5-7, and early-bird pricing disappears — along with your chance to save up to $1,200 — on July 25. You don’t need to be in fintech to know a good deal when you see one. Go buy your passes today.

Read more:



The Opinion Poll

National Weather

Click on map for forecast