While they could both go without salaries for a year, Dick had no extra money to invest in the business. Jane and Dick had several options, including structuring this as a debt transaction where Jane simply loaned the money to the company, or as convertible debt transaction where Jane’s investment would convert into equity in the next round. MORE >>

Valuation is an important aspect of VC deal terms, and a major determinant of your ultimate outcome.  I unexpectedly found that it was more helpful to think about the company valuation as an output variable in the fund-raising equation.  The net effect was more money raised, higher valuation and the same percentage of equity sold.  MORE >>

When times are really good for fund raising many teams delay to maximize their valuation. 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. You’re offered a $9 million pre-money to raise $3 million (e.g. MORE >>

Later stage startups have revenue numbers, customer acquisition costs and marketing analyses that can all be plugged into magic financial formulae by VC whiz kids that pop out instant valuations.  Most of the time, establishing valuation ends up being a crap shoot. This is only a general guide on early stage valuation.  MORE >>

Valuations are high. In times of rising valuations, it is important for entrepreneurs to think about their long term funding strategy and choose a valuation that is sustainable not just today but over the whole life cycle of your company. Seed and angel capital has never been more plentiful. This is known as a double dip. MORE >>