Steven Cinelli

Play into the volatility. See where the moves are up, down, sideways. Find complementary products and strategies that might ride the moves, yet too, one needs to counter the drafts against you.

With the recent secession of Saudi Arabia and other OPEC countries from the petrodollar agreement, and the burgeoning BRICS contingent looking at rolling out a proprietary "basket currency", the US dollar's numeraire status is threatened. This will reduce demand for the dollar over the next five years and in order to "float our fiscal boat" with the issuance of new treasuries, it seems logical that the incentive to be paid to treasury buyers needs to raised, i.e., upward moving interest rates. With a current total debt load of $60 trillion +++, within govvies (fed, state, muni), corporate and household, which is growing daily, what does this bode for the USD and USA economic condition in general...?

On pre-seed or any early stage deal, the most provocative and productive approach is rendered by Tim Draper.... His basic philosophy (at least years ago) was to "spray and pray". As a banker, economist, investor and entrepreneur, failure rates are always high and the chance of a unicorn is slim. But many venture funds make a "fund return" to their investors on 1 or 2 deals, even out of 25 investments. Getting too far into analytical grind with a pre-revenue, pre-everything company is mental masturbation. If you believe in the team and their homework to create a successful enterprise, it should be collaboration, making sure that at the consummation of a deal, both sides have appropriate incentives.

a silly way to describe dilution. one maintains the same number of shares but more shares are subsequently issued so your relative percentage of the total pot is reduced. one doesn't "lose" ownership. Further, measuring your position by percentages is misguided. Measure your position by the value of your shares, i.e., the number of shares times the current pricing. That is the appropriate way to "keep score". Think of Gates, Zuck, Brin and so on, going thru many financings over time. Zuck, the founder is down to 13% but worth billions; same with Sergey at 3% of google worth billions, and gates the same as he left he had less than 5% worth billions. All do to growth of market capitalization. Don't get confused.

While the financial machinations can support one's valuation, there are qualitative aspects to consider. If the "money" requires such an amount of the equity to disincentivize the team that is bringing the model and IP to the table, that becomes a problem. And one must understand that if moving in the right way, there will be other dilutive rounds (hopefully uprounds) and the founders/management teams will be impacted. Lastly, while a typical process is allocating "percentages" of the company, I dismiss that process as value should increase overtime from a "share price" standpoint, and the team should keep score by the relevant value between number of shares times the difference between exercise price of options and the exit price.

Lets be very clear. One can conduct a 409A or other valuation, be it DCF, comps, asset values or whatever. In the end, it become a negotiation between the investor and the company. While logic, stats, models and so on can provide substance, it ends up the belief in value creation, and how much money demands versus the intellectual property. Chemistry or alchemy?