Feld Thoughts

JANUARY 2, 2023

2001 was a dreadful year for me. No one is going to raise a $100 billion VC fund and start spraying money around at fantastical valuations, followed by everyone else suspending disbelief and believing companies, regardless of their businesses, are worth 50x next year’s revenue. 2002 sucked, but it wasn’t as dreadful.

Valuation 172

Valuation Revenue Portfolio Leadership 172

VC Cafe

JULY 4, 2022

The WSJ confirmed what we already know: Q2 venture capital investments declined both in size and in valuation. billion valuation, according to the WSJ, down from $45.6 Declining investment: U.S. VC funds invested about $47.5 VC funds invested about $47.5 Venture Capital Feels the Stock Market’s Pain, Wall Street Journal.

Venture Capital 167

Venture Capital Valuation Private Equity LP 167

YoungUpstarts

SEPTEMBER 14, 2012

Surprisingly (or perhaps unsurprisingly), the answer to these are “NO” Not at least according to “ Good to Great: Why Some Companies Make the Leap… and Others Don’t “, a phenomenal business bestseller published in 2001 by renowned business author Jim Collins. The 11 companies which made the cut?

Technical Review 159

Technical Review Merger Valuation Framework 159

Berkonomics

NOVEMBER 4, 2016

Originally created in the mid 1990’s to help with the imprecise problem of how to value early stage companies, especially those in technology, I developed what soon became known as “The Berkus Method” when published in the popular book, “Winning Angels” by Harvard’s Amis and Stevenson with my permission in 2001.

Valuation 48

Valuation North Carolina Oklahoma City Silicon Valley 48

Gust

OCTOBER 20, 2011

In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Scorecard Valuation Methodology. This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

Ben's Blog

JUNE 18, 2011

If they have, then we should be able to see some evidence that the dominant public technology companies are moving towards bubble valuations. Apple’s valuation is now a case for business historians to discuss because I don’t think there are modern precedents. Ex-cash it’s 13.5. Thirdly, the market is far bigger.

Technical Review 76

Technical Review Software Review Valuation Internet 76

David Cohen

MARCH 30, 2020

In 2001, the towers were hit. Uber took the shockingly low valuation of $4m when raising it’s first $1.5m. 3m valuation. Less than a $2m valuation for their seed round. In 2000, the Internet bubble burst. By 2002 the NASDAQ had fallen by nearly 80%. Starting a tech company after this? Or even working for one?

Founder 174

Founder Valuation Startup IP 174

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … 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. Him: $12 pre.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

YoungUpstarts

MAY 5, 2017

In 2001, in conjunction with the Russian Space Agency, American entrepreneurs Peter Diamindis, Eric C. Joe Carlen is the co-founder of Value Guards, LLC and a practitioner of business valuation, patent valuation, and market assessment. Certainly, the U.S.

New Mexico 138

New Mexico Albuquerque Mexico Egypt 138

Feld Thoughts

OCTOBER 30, 2014

He had just read my post on being uncomfortable with the phase of the current cycle and told me an anecdote from the great Internet bubble of 2001 that I hadn’t heard. He’d gotten a random note asking about his valuation when we invested relative to another financing that was just announced.

Valuation 143

Valuation Stock Angel Investor IPO 143

Venture Chronicles

OCTOBER 31, 2010

Don Dodge wrote about a very dry but critically important issue facing private companies that issue equity to employees… 409A valuations : IPO bump? – If private investors have already bid up the valuation, will there be an IPO jump in the stock price? It is called the 409A Valuation requirement from the IRS.

Valuation 42

Valuation Stock Options Lock-up Period IPO 42

The Startup Magazine

NOVEMBER 13, 2018

Belnick founded BizChair.com with $500 in 2001. This company’s valuation peaked at $10 billion in 2013/2014. What have entrepreneurs been up to since then? Well, here is a comprehensive list of 10 of the most successful investors of the last 10 years. Source: Pexels. Sean Belnick. He was 14 years old at the time. Olaf Carlson Wee.

Cofounder 142

Cofounder Venture Capital India Valuation 142

Austin Startup

JUNE 27, 2017

Valuations in startups increased dramatically during the Dot Com boom and then both valuations and the availability of investment capital nationally collapsed in 2001 with the Dot Com bust and 9/11. But the timing of the launch of these new funds almost assured their failure regardless of their investing acumen.

Venture Capital 54

Venture Capital Austin Texas Private Equity 54

Babbling VC

AUGUST 10, 2011

It's about to get rough out there and I am not even alluding to valuations. I am seriously babbling like everyone else did in 2001, 2008 and now again in 2011. What is the reality now? Well, as many have written, if you are out fundraising, I sure hope you're close to closing your round. You will be lucky to close your round.

Germany 76

Germany Stock IPO Valuation 76

Both Sides of the Table

FEBRUARY 17, 2011

When times are really good for fund raising many teams delay to maximize their valuation. 5 million raised at a $9 million pre-money valuation or 35.7% How do you push valuation? What might future markets hold in terms of valuations? Today’s $15 million pre-money valuation might be tomorrow’s $20 million.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Both Sides of the Table

AUGUST 24, 2015

I’ve seen friends (and family members) lose much of their savings that way over the years because “Black Swans” happen and in 1987, 2001, 2003 & 2008 (just to name a few from my memory) huge market gyrations caused much financial distress to people seeking short-term gains. So plan your start date accordingly.

Stock 150

Stock Finance Marketing Valuation 150

Berkonomics

MARCH 25, 2012

Because the Internet has such a long memory and documents from the distant past can be found with ease, a search the “The Berkus Method” today will yield a number of conflicting valuations culled from the many subsequent publications of the method over the ensuing years. Email readers, continue here.]

Early Stage 128

Early Stage Valuation Revenue Internet 128

Scalable Startup

AUGUST 26, 2014

As further market proof of the power of Drupal in the enterprise, Acquia has received about $100 million in funding in the past 3 months, which puts its valuation at over $1 billion. Drupal was launched in 2001, and Acquia started in 2007. There’s a lot of buzz about the Amazon acquisition of TWITCH this week. Acquia, Inc.

Founder 42

Founder Los Angeles PHP Open Source 42

Gust

SEPTEMBER 17, 2014

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. People seem concerned about valuation. At an accelerator ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

500hats.com

AUGUST 2, 2012

While a flood of new VCs came into existence during the late 90’s internet boom, many had difficulty raising new funds after the crashes of 2000-2001 and 2008 , and as a result significantly fewer fund managers exist now compared to a decade ago. In the past ten years there have been several dramatic changes in venture capital.

Silicon Valley 74

Silicon Valley Early Stage Venture Capital Valuation 74

Early Growth Financial Services

OCTOBER 23, 2014

This was the largest quarterly investment total since 2001’s first half. The trend continued in 2014: with activity during the six months through June the strongest since the comparable period of 2001. Median pre-money valuations have increased by 43% so far in 2014 compared to 2013.

Pre-Money Valuation 59

Pre-Money Valuation Equity Valuation Startup 59

Steve Blank

SEPTEMBER 14, 2009

Underwriters realized that as long as the public was happy snapping up shares, they could make huge profits on the inflated valuations (regardless of whether or not the company should have ever been public.) The valuations for acquisitions were nothing like the Internet bubble, but there was a path to liquidity, difficult as it was.

Silicon Valley 217

Silicon Valley IPO Technical Review Venture Capital 217

Steve Blank

MARCH 18, 2011

The signals are loud and clear : seed and late stage valuations are getting frothy and wacky, and hiring talent in Silicon Valley is the toughest it has been since the dot.com bubble. Underwriters realized that as long as the public was happy snapping up shares, they could make huge profits from the inflated valuations. Carpe Diem.

Internet 334

Internet IPO Silicon Valley Agile 334

Early Growth Financial Services

JULY 17, 2014

First off, how do funding, pricing, and valuations compare to those in previous periods? Looking at private markets: Valuations have risen across all funding stages — Series A pre-money valuations have soared from 4 times in 2009 to 7 times in 2014. While buyout multiples are at 10.7 times versus 6.8

Pre-Money Valuation 38

Pre-Money Valuation Valuation Deal Flow Stock 38

YoungUpstarts

MARCH 3, 2020

Chris Kape: I established JAMCO in early 2001 in the wake of the dot-com bubble collapse. Anyone involved in Internet related high-tech businesses at the time learned much from the loss of easy to raise capital with high valuations and quick IPO/RTO exits.

Partner 147

Partner Uganda Angel Investor Bulgaria 147

View from Seed

JANUARY 11, 2017

I was an early employee at PayPal and back in the 2000-2001 timeframe, and we ended up taking a fairly significant amount of strategic investment (tens of millions of $) from various banks in the US, Europe, and Asia.

Strategic Investors 120

Strategic Investors Post-Money Valuation Seed Stage Cofounder 120

Both Sides of the Table

MARCH 11, 2010

I know the standard line, “I want to do a small round now and raise a larger round later when we get A,B,C deal done and I can raise at a higher valuation.&# If it works you’re a hero. you may hit unexpected bumps in the road yourself making the next round tough.

Venture Capital 319

Venture Capital Startup Silicon Valley Warrant 319

Ben's Blog

JULY 16, 2013

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.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

finance.fortune.cnn.com

AUGUST 21, 2012

FORTUNE -- Its no secret that venture capitalists were hit hard by last decades dotcom bust, considering that median returns for 1998-2001 vintage funds are all underwater. The information is based on part of a confidential year-end 2011 investment report distributed to investors in a fund-of-funds that made commitments between 1999 and 2001.

Naming 49

Naming Term Sheet Private Equity Equity 49

Ben's Blog

OCTOBER 29, 2020

Interestingly the data for the 1990-98 and 2001-19 time periods are roughly the same – approximately one-quarter of deals priced above the initial filing range. Taken together, we can hypothesize that overall investor demand for IPOs was weaker in 1980-1989, in the middle in 1990-98 and again in 2001-2019, and highest in the dot-com bubble.

IPO 36

IPO Securities and Exchange Commission Demand SEC 36

VC Adventure

FEBRUARY 17, 2016

I’d differentiate this from what we saw in 2008 in the private markets where prices contracted – in some cases relatively dramatically – but where there wasn’t a true bubble bursting in the way we saw in 2001. But to be clear, I thought this long ago and well before the public markets started reacting. .

Marketing 48

Marketing Balance Sheet Valuation Venture Capital 48

genylabs.typepad.com

SEPTEMBER 24, 2011

I wont bother going into details on start-up financing terms ( see this post for an overview of typical VC terms) except to say if you dont know and understand: the firms cap table and valuation. The best start-up I ever invested in went bankrupt in 2001. what kind of stock you are getting. what your rights are.

Equity 40

Equity Technical Review San Jose Stock 40

Feld Thoughts

APRIL 21, 2016

In 2001 and 2002 I learned a brutal set of lessons, including experiencing that $100 million of paper money going to $0 when Interliant went bankrupt. And, as a VC, I experienced a VC fund that was quickly worth over 2x on paper that ultimately resulted in being a money losing fund.

Marketing 70

Marketing Down Round Startup IRR 70

thebarefootvc

AUGUST 26, 2015

As someone who invested through the 2001 and 2008 crashes I can assure you that down rounds and fire sales are not fun for anyone involved. Pay attention to who you’re taking money from and aim for a reasonable valuation. Entry valuations need to allow for room to grow and hit milestones or the next round may be a tough one to raise.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

AUGUST 26, 2015

As someone who invested through the 2001 and 2008 crashes I can assure you that down rounds and fire sales are not fun for anyone involved. Pay attention to who you’re taking money from and aim for a reasonable valuation. Entry valuations need to allow for room to grow and hit milestones or the next round may be a tough one to raise.

Marketing 40

Marketing Investment Bankers Valuation China 40

thebarefootvc

JULY 26, 2015

As someone who invested through the 2001 and 2008 crashes I can assure you that down rounds and fire sales are not fun for anyone involved. Pay attention to who you’re taking money from and aim for a reasonable valuation. Entry valuations need to allow for room to grow and hit milestones or the next round may be a tough one to raise.

Marketing 40

Marketing Investment Bankers Valuation China 40

This is going to be BIG.

JULY 30, 2015

One of the first things I did when I joined the venture asset class as a lowly institutional LP analyst in 2001 was to build the VC fund cashflow model. I assumed the following: Seeds are done as a $1mm round on a pre-money valuation of $5mm. Series A's are done as a $5mm round on a pre-money valuation of $15mm. How about price?

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60