Remove Dilution Remove Finance Remove Post-Money Valuation Remove Sales
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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

Then you can do a little bit of research and find out that very few companies ever achieve this valuation in a trade sale so you’re clearly gunning for an IPO. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e. The risk wouldn’t be appropriate.

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Founder Ownership Math, Rainy Days, and Bigger Pies

This is going to be BIG.

Still, a lot of founders are worried about early dilution and how it affects their eventual outcome when the company is sold. You go back and forth on a price and you eventually settle on a post-money valuation cap of $6.5mm, meaning you have sold about 23% of your company. That’s because dilution isn’t subtraction.

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In VC deals, Price Doesn't Matter - But The "Promote" Does

Seeing Both Sides

VCs have an unfair advantage when it comes to financings. A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). In contrast, the typical venture capitalist, either individually or across their partnership, will do 5-10 financings in any given year.

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Walking Away From Liquidity

Seeing Both Sides

If different investors have invested at very different prices, or if the entrepreneur has not made money before and this is their first shot, there can be greater tension inserted into a naturally tense situation. But the Series C investor who just invested at an $80 million post-money valuation would be bitterly disappointed.

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Shark Tank Season 4 episode 2 breakdown

Lightspeed Venture Partners

post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation. The company ended up negotiating with Cuban and settled on $300k for 30% of the company, or a $1M post money valuation.