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. It’s not really a demo day if only friends and family show up.
Gust
SEPTEMBER 27, 2014
That’s why investors attend Demo Days and look for acceptance into such programs as one of several ‘validators’ of a startup. Simply enter their name and email, write a good cover letter, and click the share button.
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David Teten
FEBRUARY 9, 2015
The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital. If you are testing the market to see what terms you can get, just say, “We are targeting to raise $X at pre-money valuation of $Y.”
www.paulgraham.com
APRIL 28, 2010
Some angel groups charge you money to pitch your idea to them.Needless to say, you should never do this. A big-name VC firm will not screwyou too outrageously, because other founders would avoid them ifword got out. When we got into such a scrape, our investorstook advantage of it in a way that a name-brand VC probably wouldnthave.
www.paulgraham.com
OCTOBER 23, 2010
If you work your way down the Forbes 400 making an x next to the name of each person with an MBA, youll learn something importantabout business school. Some angels, especially those with technology backgrounds, may be satisfied with a demo and a verbal description of what you plan to do. Thereis no rational way.
www.paulgraham.com
APRIL 28, 2010
2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get. Ifyou put $50,000 into a company at a pre-money valuation of $1million, then the post-money valuation is $1.05
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