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How to Evaluate an Offer from a Startup Incubator

The Startup Lawyer

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.

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What are the most valuable recommendations in order to raise money from VCs connected via Gust?

Gust

That’s why investors attend Demo Days and look for acceptance into such programs as one of several ‘validators’ of a startup. If you share your material with a VC and get a polite response that you are out of their range, you should double check the investor’s profile page.

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Don’t Pitch A Venture Capitalist Without This Checklist

David Teten

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.” We almost always require a demo, or at least a mockup. ” Investors value getting a sense of your expectations. Raising capital is about quality of outreach, not quantity.

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ProfessorVC: Touched by an Angel

Professor VC

Again, I see nothing wrong with this, although entrepreneurs often prefer convertible debt as it defers the valuation discussion and leaves the Series A price for the venture firm to set. He also said they typically only invest at a $1 million pre-money valuation or less. Are DEMO's days numbered?

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How to Fund a Startup

www.paulgraham.com

If you have to choose between spending time on the demo or thebusiness plan, spend most on the demo. When they demo it, one of theangels is willing to invest. Here are the terms: a $2 millioninvestment at a pre-money valuation of $4 million, meaning thatafter the deal closes the VCs will own a third of the company (2 /(4 + 2)).

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How much equity for investors and employees?

dondodge.typepad.com

Don Dodge on The Next Big Thing Thoughts on business and technology Home Archives Profile Subscribe About Me « Boston VCs gets first look at Y Combinator Demo Day | Main | Digg-nation is HUGE! Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees?

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How to Start a Startup

www.paulgraham.com

Some angels, especially those with technology backgrounds, may be satisfied with a demo and a verbal description of what you plan to do. If you give an investor new shares equal to 5% ofthose already outstanding in return for $100,000, then youve donethe deal at a pre-money valuation of $2 million.

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