Both Sides of the Table

MAY 30, 2018

I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you. Of course, unlike cars there is no direct comparison across each startup so these are just some general guidelines to try and even the information field.

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Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Both Sides of the Table

JULY 23, 2014

We are in a bubble (with so many private $1bn+ valuations). pre-money valuation you certainly would want to exercise your right to continue investing if you had prorata rights. The “big boom” in startup financing started around March 2009?—?more Where are we today? more than 5 years ago?—?and and hasn’t abated.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital. Only you know.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. At the end of the day Kayak’s playing a key role in the online travel process, but it appears more of the revenue comes from filling top of the conversion funnel rather than the middle or bottom of it. Post-money valuation probably no higher than $12M (2). April 17, 2011.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

ReadWriteStart

OCTOBER 7, 2010

As a thumb rule, try to get enough validation so that you can get to at least a $2 million pre-money valuation before raising equity capital. Sub-$2 million pre-money, it is better to bootstrap. If you have to raise money, try to do so as convertible notes. Tags: StartUp 101. Photo by lco.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. Term-sheets and Valuations: Thinking about Negotiations. The Valuation Question. When companies seeking their first round of serious funding are good enough to receive a term-sheet from an investor, the first issue that always arises is valuation. Let’s start at the end.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Both early- and late-stage startup valuations are currently elevated.

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Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Both early- and late-stage startup valuations are currently elevated.

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Valuation Pre-Money Valuation Distribution Early Stage 295

Austin Startup

JUNE 21, 2018

Our pre-money valuation for the seed round is 2 trillion dollars.” Now, if you’re a crypto entrepreneur, you still have to abide by the basic rules of good startups (link shamelessly inserted if you missed it before). It will revolutionize produce sales globally. By: Joe Merrill, Partner at Sputnik ATX.

Securities and Exchange Commission 61

Securities and Exchange Commission SEC Pre-Money Valuation Security 61

Both Sides of the Table

AUGUST 23, 2010

What I notice is that people further the conversation, talk with each other, network, try to get noticed (linking to their websites, etc.). Answers OnStartups- Shortly after I started blogging I noticed a website called “ Answers on Startups ,&# which I instantly loved and spent a bunch of time on. It’s true. No, really.

Silicon Valley 301

Silicon Valley Pre-Money Valuation Technical Review Software Review 301

Agile VC

MAY 26, 2011

AGILEVC My idle thoughts on tech startups. Salesforce.com is a startup with 76,000 subscribers (over 2.1M I also joke with Reid Hoffman that this was back in the days before he was “Reid” Reid’s an incredible entrepreneur, startup investor, and human being. How to Evaluate Firms for a Seed VC. May 26, 2011.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Both early- and late-stage startup valuations are currently elevated.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Both Sides of the Table

FEBRUARY 17, 2011

When times are really good for fund raising many teams delay to maximize their valuation. This conversation seems to come up very frequently these days both with portfolio companies and with entrepreneurs just looking for mentorship. In the seed phase startups are typically raising between $500k-$1m in today’s market.

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Pre-Money Valuation Dilution Valuation PR 303

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. Marty Zwilling.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

David Cohen

AUGUST 1, 2018

We’re living at a time when valuations are very high, as Fred Wilson and Ari Newman have both recently pointed out. When valuations rise, so do the caps on notes, which are upper limits on valuation at conversion. For example, a company may be raising $1M in notes at $15M pre-money valuation cap with a 20% discount.

Pre-Money Valuation 83

Pre-Money Valuation Valuation Equity Finance 83

Both Sides of the Table

JUNE 5, 2015

Over the years I’ve written extensively about the downsides of convertible notes for startups such as here , here and here. In the old days VCs funded off of a “pre-money” valuation. Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

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Incubator Pre-Money Valuation Option Pool Advisory Board 105

YoungUpstarts

SEPTEMBER 4, 2017

Investing in startups is a lot more than just buying “stock” in a company. For investors who have come to the table with a history investing in publicly listed companies or the property market, it’s easy to think that backing startups is largely a “set and forget” strategy. Ask yourself, where is your startup currently struggling?

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. Valuation caps can come into play in settings other than seed-stage convertible note financing rounds. Read on for a fuller explanation. by February 2006).

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Scott Edward Walker

APRIL 22, 2012

This part 2 will address the economics of a convertible note seed financing and the three key economic terms: (i) the conversion discount, (ii) the conversion valuation cap and (iii) the interest rate. and (ii) what happens if the maturity date is reached prior to the note’s conversion to equity?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

Genuine VC

JULY 30, 2012

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndicate 136

Early Growth Financial Services

OCTOBER 23, 2014

Not only was the conversation lively, there was even a bit of a West Coast versus East Coast smackdown. Median pre-money valuations have increased by 43% so far in 2014 compared to 2013. This was the largest quarterly investment total since 2001’s first half. But the number of investments is 37% lower.

Pre-Money Valuation 59

Pre-Money Valuation Equity Valuation Startup 59

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

The Startup Lawyer

JUNE 22, 2010

If you follow this blog, you know that I think convertible debt is a good structure for a startup’s angel round. For more background, check out this post for an example of how convertible debt and the conversion discount works.). of the startup immediately after the Series A round. Convertible Note Discount.

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

K9 Ventures

MARCH 23, 2011

Since the financing would likely happen in short order, there was no need to have a valuation cap in the note. The founders’ interest is to maximize the valuation of the company at the time of a follow-on financing, thereby minimizing founder dilution. There are multiple issues at hand here.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Both Sides of the Table

SEPTEMBER 5, 2012

When convertible debt first started being introduced as a “faster, cheaper way to get startups funded” they didn’t have pricing built into them. What the entrepreneurs were really saying is, “I don’t want to take a lower valuation now, while I don’t have customers or a full team.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

YoungUpstarts

SEPTEMBER 11, 2013

Sometimes the list of challenges may feel never ending – from writing the business plan to finding the right partner – but one of the single most important challenges entrepreneurs face is calculating a realistic, defensible pre-money valuation. . What is a pre-money valuation and why should I care?

Pre-Money Valuation 133

Pre-Money Valuation Valuation Angel Investor Cofounder 133

Gust

OCTOBER 12, 2011

In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. That is obviously a challenge for the typical cash-strapped early stage startup that is seeking to raise more capital and is not in any kind of position to be repaying loans. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

The Startup Lawyer

JANUARY 10, 2011

Both sets of advice tend to ignore the gap between an investor’s expression of investment interest and your startup’s receipt of the term sheet. Term sheet purgatory can seem like is an eternity for a startup, although it may last from one week to over one month. And this has potential negative consequences for the startup.

Term Sheet 64

Term Sheet Pre-Money Valuation Liquidation Preference Option Pool 64

Both Sides of the Table

APRIL 14, 2010

It’s frustrating because you did $4 million in revenue last year and have a $7 million run rate for this year and you’re struggling to get financed for even $5 million while other startups are out there with no revenue raising $10 million at a $40 million pre money valuation! But pass they will. Brain damage.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Scott Edward Walker

APRIL 9, 2012

Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. ii) what happens if the maturity date is reached prior to the note’s conversion to equity? price the round).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

The Startup Lawyer

AUGUST 24, 2010

Here are terms that are typically found in a convertible note term sheet: Amount of the Offering : How much capital can the startup raise via the convertible debt offering? Prepayment : Can the startup prepay the convertible notes without the consent of the convertible note holders? the determination of qualified financing )?

Term Sheet 62

Term Sheet Pre-Money Valuation Liquidity Event Warrant 62

Up and Running

SEPTEMBER 20, 2021

Since almost all startups do not possess traditional debt lenders, the list usually consists of data of the shareholders and the percentage they own. For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Common shares.

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Cap Table Pre-Money Valuation Stock Options Option Pool 112

Professor VC

FEBRUARY 12, 2015

In the episode, Kristy Kruger talks about picturing unicorns roaming the planes in Africa as a kid and being at a party many years later when the topic of conversation turned to endangered species: It was about a group of five to seven people, kind of standing around the keg, just talking. Is this Boom for Real?"

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28