Startup Professionals Musings

AUGUST 4, 2014

Amount of venture funding provided. Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Keep your wits about you to make sure that dilution is done equitably and evenly.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

View from Seed

DECEMBER 4, 2019

Over the last 10 years, we’ve been in a bull market with considerable froth in late stage financing activity and valuations. For example, a $10B endowment might be looking to have 10% ($1B) allocated to venture capital at any one time. This would suggest that TVPI would be performing well.

LP 256

LP IRR Distribution Portfolio 256

Both Sides of the Table

SEPTEMBER 10, 2021

how on Earth could the venture capital market stand still? One of the most common questions I’m asked by people intrigued by but also scared by venture capital and technology markets is some variant of, “Aren’t technology markets way overvalued? With the enormous changes to our economies and financial markets?—?how

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

SEPTEMBER 28, 2014

Valuation. I wanted to call out special attention to valuation in this debate. Simply put – down rounds are very hard to achieve psychologically because insiders fight against them (rightly or wrongly) and outsiders have a mental gap that if your valuation is going down your company is forked up and they often just pass.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

thebarefootvc

MAY 8, 2012

This is also what I advise entrepreneurs when discussing dilution and valuation — think of the bigger picture and the end game of what you are looking to build — and who will help you get there. I’d rather have smaller ownership of an exponentially larger pie than larger ownership of a smaller pie.

Venture Capital 78

Venture Capital Syndicate Syndication Bandwidth 78

ReadWriteStart

JUNE 1, 2020

Under this category, you have the angel investors who would invest their own money and Venture Capital or VC firms, who manage funds aimed towards specific startup sectors and stages. The bridge or exit stage is generally of very large transactions and for companies with substantial valuation. Equity investors. Debt investors.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

Startup Professionals Musings

JANUARY 19, 2020

Based on the best evidence I can find, the genesis of this trend and the advantages come from several evolutionary changes in the startup investment industry, and some innovations driven by the recession several years ago: Venture capital funds are still regaining momentum. Super angels sometimes drive up valuations.

Angel Investor 314

Angel Investor Venture Capital Silicon Valley Startup 314

Both Sides of the Table

SEPTEMBER 25, 2010

Either would be fine with startups, so long as they can easily change their valuation. The key is making sure the second close isn’t too high (I think 50% of X sounds about right) because you’ll be adding on that dilution to yourself & “X&# investors will own less of the company. I agree on all points.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Startup Professionals Musings

OCTOBER 7, 2022

On the other hand, venture capital organizations typically look for needs that exceed $2 million. The average valuation for angel investments is $2 million, which will get you $500,000 for 20 percent of your startup. Every type of investor has comfortable ranges and limits. What business milestones have you met?

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

ReadWriteStart

SEPTEMBER 9, 2019

Although some founders take venture capital in exchange for equity, that’s not the only way to do it. To learn more about the pros and cons of venture capital — and founders’ funding alternatives — I caught up with Mark McKee. Anderson: So is venture capital the right approach for most startups?

Venture Capital 105

Venture Capital Equity SBA Finance 105

David Teten

JANUARY 19, 2021

Similar to the explosion of seed funds in the past decade, we (and some limited partners too ) believe these Flexible VCs are on the forefront of what will become a major segment of the venture ecosystem. We detail below the major categories of VC: VENTURE CAPITAL TYPOLOGY. Yes, via conversion rights at a valuation cap.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

VC Cafe

SEPTEMBER 28, 2023

The Carta data showed the following trends: About half of the companies that closed had not raised any venture capital, relying solely on bootstrapping, angel investors, or other sources. Startups that raised in 2021 and 2022 often at high valuations, had to adjust quickly to the new market conditions of 2023.

Valuation 103

Valuation Startup Angel Investor Dilution 103

Startup Professionals Musings

JANUARY 4, 2020

On the other hand, venture capital organizations typically look for needs that exceed $2 million. The average valuation for angel investments is $2 million, which will get you $500,000 for 20 percent of your startup. Every type of investor has comfortable ranges and limits. What business milestones have you met?

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Both Sides of the Table

OCTOBER 11, 2009

But if you approach them with a very fair valuation and ask for a small check (say $10k, which should be nothing to someone in this position) I believe you’ll have a reasonable shot at it provided that you actually have an interesting company. At a $2 million valuation this is 0.5% of the company – about right.

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.]

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically. That seems fair.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

MARCH 21, 2013

It also is a great way to finance your business without facing dilution before you actually raise venture capital and when the valuation you might get from angels is less than you’d want. By year 2 I’d like to see PS at 50% maximum, which is still high.

Software Review 321

Software Review Software IP Technical Review 321

View from Seed

SEPTEMBER 14, 2021

Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Was this a lost decade for venture capital? 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.

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Was this a lost decade for venture capital? 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.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Both Sides of the Table

OCTOBER 1, 2009

This has a tangible impact on the valuation of start-ups and the pace of investment. If you’re raising $2 million and can close on $3 million – don’t optimize to minimize short-term dilution, optimize for contingencies in case the market gets worse. Bad stock markets mean less IPO’s and lower prices for M&A.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Both Sides of the Table

APRIL 14, 2010

If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. Talk openly about valuation and what they’ll accept so you know what you’re dealing with.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Both Sides of the Table

JULY 25, 2010

The key to this strategy is getting 5 people who form the social proof to help you get a bigger angel round done at a higher valuation by tons of industry insiders and thus offering the social proof you need attract great employees and ultimately venture capital investors. So what are you waiting for? Go get your anchors.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Startup Professionals Musings

DECEMBER 27, 2014

Based on the best evidence I can find, the genesis of this trend and the advantages come from several evolutionary changes in the startup investment industry, and some innovations driven by the recent recession: Venture capital funds are still recovering from the recession. Super Angels sometimes drive up valuations.

Angel Investor 260

Angel Investor Silicon Valley Startup Portfolio 260

ithacaVC

SEPTEMBER 10, 2012

I recently got a question from a person in a large company who is thinking about joining a startup that expects to raise venture capital. But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” It is legally possible to grant non-dilution via a contractual right.

Dilution 53

Dilution Employee Cap Table Stock 53

View from Seed

SEPTEMBER 14, 2021

Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Was this a lost decade for venture capital? 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.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

The Next Web

SEPTEMBER 13, 2013

Many Asian entrepreneurs tell me that they want to raise funds from Silicon Valley firms because they perceive the valuations to be higher. The venture capital landscape in Asia is varied and complex, as most of the active firms on the continent are concentrated in just a few areas. Finally, don’t over-optimize on valuation.

Asia 132

Asia Silicon Valley India Term Sheet 132

This is going to be BIG.

OCTOBER 10, 2014

Well, if you group them all up, here''s what you get: Pre-Money Valuations (M). You wind up with about a four-ish valuation, mostly right around four, but with some outliers that bring up the average. So, if you''re looking at pre-money valuations saying "But hey, my deal wasn''t valued at X, WTF??" Pre-Money Valuations (M).

Pre-Money Valuation 146

Pre-Money Valuation Dilution Valuation Term Sheet 146

VC Cafe

FEBRUARY 28, 2020

YC shares some interesting data points based on their follow on experience with core KPIs, valuation range and expected dilution. Final point is on Funding Benchmarks , something I’ve written about in the past on VC Cafe. It can be pretty standard for SaaS and differ a lot in hard tech/moonshots. For the full guide: [link].

Dilution 166

Dilution Valuation Founder Cost 166

Both Sides of the Table

APRIL 14, 2012

Did raising money at a $500 million valuation help secure the $1 billion deal? 99.9999% of you won’t be contemplating raising capital at $500 million any time soon or selling for a billion. My friend Christin Herron of Intel Capital weighed in on the issue. “Impending” valuation. Was this a good thing?

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

VC Cafe

FEBRUARY 27, 2024

Everyone moved to earlier stage – part of the decline in late stage investing is the ‘baggage’ of companies that previously raised money at inflated valuations that they would struggle to justify in today’s market. That’s yet another reason for micro funds to move earlier in the fundraising timeline.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Startup Company Lawyer

MARCH 14, 2010

If you don’t, please educate yourself on this site, Venture Hacks and the term sheet series by Brad Feld/Jason Mendelson, among other places. If you really want to understand the nuances in venture capital financing documents, please review the NVCA model venture capital financing documents. . under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

ReadWriteStart

SEPTEMBER 10, 2010

You can get cash without diluting your ownership in the company. Why not go further, develop more valuation, customer experience, and really, deeply validate the business? Why not go further, develop more valuation, customer experience, and really, deeply validate the business? I personally have nothing against venture capital.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Startup Professionals Musings

SEPTEMBER 26, 2015

Perhaps they're way off in their valuation (usually far too high), or paralyzed by fear at seeing the other terms, because they have no idea what's normal, and what's worth a fight to the death (their startup's). In very early startups, which have no valuation, the term sheet may specify a convertible note.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

Jason Ball

SEPTEMBER 28, 2010

Don’t sweat the valuation too much. If this is your first start up, you’re not going to get a great multi-million dollar pre-money valuation, nor a lot of cash up front. Don’t worry about your “dilution&#. That’s your mantra… Tags: Europreneurship Venture Capital. Be like Jack.

Pre-Money Valuation 34

Pre-Money Valuation Valuation Dilution Venture Capital 34

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. You benefit from the capital and investors benefit from a nice discount at conversion, usually in the range of 20 percent. I speak from experience.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49