Startup Professionals Musings

SEPTEMBER 6, 2010

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Gust

APRIL 11, 2014

Before, it might have net assets that are near zero. Suppose it raises $2 million at a $6 million pre-money valuation. Yet what matters fundamentally is economic dilution : Will adding newly issued shares make existing shares less valuable, and if so, by how much?

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

This is going to be BIG.

JULY 30, 2015

I'd say no--they're taking money from the same endowments, high net worths and pension funds as everyone else. So, whether you're doing Seed, Series A, or Series B, each round would get its net 25% to LPs, no? I assumed the following: Seeds are done as a $1mm round on a pre-money valuation of $5mm.

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

Both Sides of the Table

APRIL 3, 2010

As a reminder, VC funds are comprised of money from LP’s (Limited Partners) that include university endowments, pension funds, high-net-worth individuals, insurance companies and large corporations. A totally new VC is willing to invest in the company but at a $15 million pre-money valuation.

Pre-Money Valuation 226

Pre-Money Valuation Venture Capital LP Term Sheet 226

David Teten

NOVEMBER 15, 2013

I have frequently heard the expression from other investors, “We can put a lot of money to work here.” This is the psychology that drives VCs to load up a company with more capital, rationalizing that $5m at a $20m pre-money valuation is little different than $10m at a $40m pre-money valuation.

Management 114

Management Pre-Money Valuation Venture Capital New Hampshire 114

Berkonomics

SEPTEMBER 27, 2018

But the real asset became obvious to me at almost exactly five PM that day, when all eight stopped what they were doing and began using a tool they had licensed from a Florida company to find other Internet gamers to join them in playing intense first party shooter games over the ‘net. And then, unbelievable value growth.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Altgate

MAY 24, 2012

To estimate how much the founders and other insiders owned after each of the startup’s first three rounds of financing, we used the two major factors that affect dilution: the capital raised by the startup and the pre-money valuation it received. million, with a valuation of $10 million. As shown in Figure 9.5

Pre-Money Valuation 43

Pre-Money Valuation Cofounder Dilution Valuation 43

Berkonomics

SEPTEMBER 17, 2011

But the real asset became obvious at almost exactly 5 PM that day, when all eight stopped what they were doing and began using a tool they had licensed from a Florida company to find other Internet gamers to join them in playing intense first party shooter games over the ‘net. By this time there were not one but four million registered users.

Liquidity Event 59

Liquidity Event Pre-Money Valuation Sales Valuation 59

www.currentlyobsessed.com

MAY 28, 2010

Instead of “We are worth about $5m because we have done XYZ and we need to raise $1m, so let’s sell 20%&# it’s better to think about valuation as an output variable, like “Let’s raise $2mm and sell 33%, our (pre-money) valuation is therefore $4mm.&# Future value is key.

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42

www.paulgraham.com

APRIL 28, 2010

Such deals may be a net winfor founders, because you get multiple VCs interested in yoursuccess, and you can ask each for advice about the other. Here are the terms: a $2 millioninvestment at a pre-money valuation of $4 million, meaning thatafter the deal closes the VCs will own a third of the company (2 /(4 + 2)).

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

K9 Ventures

MAY 14, 2011

The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000). or may come from VC firms (as is now the case with YC being funded by Sequoia ). Most angels will usually invest under $50K per investment.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Rob Go

NOVEMBER 30, 2012

This means greater focus on ownership, pre-money valuations, and dollars in. The strategy behind that is that there is a much higher probability of catching a super-outlier if you cast a wide net. We see more and more funds “walk away” if they can’t get the numbers they hope to get.

Seed Stage 55

Seed Stage Pre-Money Valuation Dilution Early Stage 55

www.paulgraham.com

APRIL 28, 2010

2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get. Ifyou put $50,000 into a company at a pre-money valuation of $1million, then the post-money valuation is $1.05

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63