Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Professor VC

APRIL 7, 2011

This will also serve as a good pointer for all the entrepreneurs who ask why I am not interested in their company led convertible note financing round. In a convertible note structure, Im penalized for increasing your valuation. Is This a Bridge or a Pier? In cases where it is truly a bridge financing (i.e.

San Jose 36

San Jose Technical Review Angel Investor Valuation 36

cdixon.org

AUGUST 3, 2012

Facebook’s market cap is about half of what most tech investors expected before the IPO. - It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As. -

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Both Sides of the Table

MAY 23, 2010

Often when startups who have raised venture capital need another round of financing they will turn to their existing investors to give them money before raising from outsiders. a loan) that is later converted to equity at the time of the next financing. Maybe the market views this as not worth the price you paid?

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

The Startup Lawyer

FEBRUARY 4, 2011

The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value. Pre-money valuations startups receive from incubators are typically low…really low. The “revised for the cash investment only&# pre-money valuation is $600,000. (2)

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105