View from Seed

SEPTEMBER 14, 2021

Q: What is going to happen to the cost of capital? Q: What is the opportunity cost of not being in tech? Both early- and late-stage startup valuations are currently elevated. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Source: Cambridge Associates.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Both Sides of the Table

FEBRUARY 15, 2016

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. In other words, raising $2 million at a $6 million pre-money valuation has always been easier & quicker than raising $20 million at any valuation.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Startup Professionals Musings

SEPTEMBER 30, 2011

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

View from Seed

SEPTEMBER 14, 2021

Q: What is going to happen to the cost of capital? Q: What is the opportunity cost of not being in tech? Both early- and late-stage startup valuations are currently elevated. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Source: Cambridge Associates.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Gust

NOVEMBER 18, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Startup Professionals Musings

SEPTEMBER 6, 2010

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Both Sides of the Table

JUNE 5, 2015

In the old days VCs funded off of a “pre-money” valuation. If you add the pre-money valuation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-money valuation. It’s very simple.

Pre-Money Valuation 150

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

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.”

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Both Sides of the Table

FEBRUARY 17, 2011

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. million and you’re an early stage business this is probably a fair deal. You’re offered a $9 million pre-money to raise $3 million (e.g.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

View from Seed

OCTOBER 21, 2014

Using NextView as an example, since we both seek to lead the seed round and only lead during this round, I’ve seen this trend manifest in one of two ways: In a priced round, the entrepreneur will often share their valuation ask (or a stated floor) for the pre-money valuation of their company much sooner in the process.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

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. 8) Determine the Opportunity Costs.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

This is going to be BIG.

JULY 30, 2015

Second, their dollars dollar cost average at cheaper entry prices. Here's another way to look at it--the cost of capital argument. So, if that was the case, and the market was competitive, why wouldn't each VC be bidding up a round up until the point where they could get the return that matches their own cost of capital?

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

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.   A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

K9 Ventures

MARCH 23, 2011

If they don’t learn to do this, then when they raise money from institutional investors and have a formal Board of Directors put in place, they are ill-equipped to know what it means to have a board meeting, to prepare a board information packet, and most of all to manage the board (and yes, every board needs to be managed).

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Feld Thoughts

JULY 29, 2011

Jane felt comfortable with receiving 10% for $50k, but no less, so they agreed on a $450k pre money valuation of their startup. However, there is a lot to be said for keeping things simple during the early stage of a startup. It helps control transaction costs in terms of both time and money.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Both Sides of the Table

SEPTEMBER 5, 2012

As in, “your money into my company will convert at a 15-20% discount to the next round of capital I raise with a maximum price of $8 million pre-money valuation (or whatever the cap was).” You rarely find full ratchets in early-stage deals any more. That’s not possible.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

VC Cafe

SEPTEMBER 26, 2022

The press took notice, especially since just a few months later startups were laying off employees en-masse to cut costs. Sustainable growth: Prioritise sales efficiency over growth at all costs. ValuatIon should be a function of value, not ego. In times of uncertainty, be like Scrooge McDuck! Our goals, their goals.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Hippoland

AUGUST 31, 2018

So, I thought it might make sense to take a step back and talk about all the stages of early stage fundraising here in the Silicon Valley. In early stage investing, at least in Silicon Valley, there are basically 4 stages: pre-seed, seed, post-seed (or pre-A), and series A.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

David Teten

NOVEMBER 15, 2013

Each new investor tends to raise valuations and lower returns for all the other competitive investors. It is mathematically impossible for the median investor to beat a low-cost index, after expenses. (Of I have frequently heard the expression from other investors, “We can put a lot of money to work here.”

Management 114

Management Pre-Money Valuation Venture Capital New Hampshire 114

www.paulgraham.com

APRIL 28, 2010

4 ] Seed Funding Firms Seed firms are like angels in that they invest relatively smallamounts at early stages, but like VCs in that theyre companiesthat do it as a business, rather than individuals making occasionalinvestments on the side. Angels and even VC firms occasionally do this, but they alsoinvest at later stages.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Hippoland

AUGUST 31, 2018

So, I thought it might make sense to take a step back and talk about all the stages of early stage fundraising here in the Silicon Valley. In early stage investing, at least in Silicon Valley, there are basically 4 stages: pre-seed, seed, post-seed (or pre-A), and series A.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

www.currentlyobsessed.com

MAY 28, 2010

I unexpectedly found that it was more helpful to think about the company valuation as an output variable in the fund-raising equation. It hardly deserves any attention at all in the early stages. For some closing thoughts, I’ll just add that: Valuation tends to be too much of a focus for most early stage companies.

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42