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Venture Capital Q&A Session

Both Sides of the Table

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

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On Bubbles … And Why We’ll Be Just Fine

Both Sides of the Table

In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. million pre-money valuation is now raising $1 million at a $12 million valuation the next investor has nowhere to go but up (or sit out the investment).

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Bad Notes on Venture Capital

Both Sides of the Table

You’ll find out the minimum when the next round is raised. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. People seem concerned about valuation. Doesn’t their investment determine the price of the next round? A down round?

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Bad Notes on VC

Gust

You’ll find out the minimum when the next round is raised. Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

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Capital Market Climate Change

Ben's Blog

You probably thought that valuations would be roughly the same as they were the last time you raised money. 3/30/2001: 26.3. And those are big companies with real earnings, so you can imagine how a private company’s valuation might fluctuate. In June of 2000, I raised money at an $820M post-money valuation. Things change.

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Current Startup Market Emotional Biases

Feld Thoughts

Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?

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Capital Market Climate Change

Ben's Blog

You probably thought that valuations would be roughly the same as they were the last time you raised money. 3/30/2001: 26.3 And those are big companies with real earnings, so you can imagine how a private company’s valuation might fluctuate. In June of 2000, I raised money at an $820M post-money valuation. Things change.