Conversion Demand Dilution Pre-Money Valuation 
Both Sides of the Table
MAY 28, 2018
There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. It goes something like this … VC: “How much money are you raising?” One entrepreneur refrain I sometimes hear is “We want to raise some extra money for M&A activities.”
Both Sides of the Table
JUNE 5, 2011
I wrote this because over the last decade I’ve seen a destructive cycle where otherwise interesting companies have been screwed by raising too much money at too high of prices and gotten caught in a trap when the markets correct and they got ahead of themselves. Again, prices are expressed as pre-money valuations.
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Both Sides of the Table
FEBRUARY 17, 2011
This conversation seems to come up very frequently these days both with portfolio companies and with entrepreneurs just looking for mentorship. For many businesses you should keep your costs low & your capital raises low until you discover whether you are really on to a big idea where there is market demand.
Hunter Walker
AUGUST 7, 2017
Employee options pools, typically created at the point of financings, shouldn’t be treated as haggling over dilution, but rather a strategic resource that will help founders build the best team and, by extension, a more valuable company.
Both Sides of the Table
MAY 30, 2018
If a VC prices a flat or down round it means that management teams are often taking too much dilution. How you talk about valuation will of course depend on how well your business is performing and how much demand you have from other investors. But there is also another very rational reason.
Tim Keane
JANUARY 12, 2010
An average of these ranges results in a pre-money valuation of about $4MM. If similarly situated companies are seeing $3.5MM pre-money valuations, this might become the target valuation. ($2mm invested divided by an average % ownership required to me the investor’s target of 33%).
Gust
OCTOBER 21, 2011
In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes. Investors would be repaid their principal, plus accrued interest, divided by the conversion price (let’s say 30% discount, so 1 – 0.3 = 0.7). a) payable upon demand as of the closing of such transaction; or. (b)
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