View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs?

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. Unsurprisingly, all the sharks passed, based on market size and valuation expectations. The company was started six weeks ago, had no sales and no retail distribution yet.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

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.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs?

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Lightspeed Venture Partners

OCTOBER 7, 2012

He had been at it for 6 months and had no sales or distribution lined up yet. They are seeking $40k for a 33% stake and want investors who can provide introductions for distribution and licensing on their behalf. That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Lightspeed Venture Partners

SEPTEMBER 21, 2013

to fund the company at a $6M post money valuation from a number of investors including Selena Gomez. Despite having over 500k downloads and making $450k in revenue over the last 21 months, he had only $185k left in the bank, which meant that he would be out of business in 90 days if he didn’t raise more money.

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

Lightspeed Venture Partners

NOVEMBER 19, 2012

The first 15,000 units sold out in six weeks in specialty retailers that distributed it in the Quantico area, and another 80,000 are being made now. Interestingly, this new deal actually lowered the pre money valuation for the company. 75,000 for 10% implies a $675,000 pre money valuation.

Pre-Money Valuation 166

Pre-Money Valuation Alabama Valuation Churn Rate 166

crowdSPRING Blog

APRIL 26, 2013

Downfalls of Distributed Startups – [link]. Q1 Venture Capital Spending & Number Of Deals Down, M&A Activity Drops 44 Percent And Pre-Money Valuations Plummet – [link]. Don’t let Silicon Valley fool you—millenials are the least entrepreneurial generation | Quartz – [link].

Social Media 90

Social Media Small Business Design Media 90

Lightspeed Venture Partners

OCTOBER 22, 2012

This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). Most of the sharks dropped out due to valuation being too high, but Robert and Barbara showed interest. Barbara countered with $55k for 17% ($268k pre money).

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

This is going to be BIG.

JULY 30, 2015

You're putting money in over the first 3-4 years, but you're not really seeing most of it back until years 7, 8, and 9, if not longer. Distributions can actually be drawn out over an extended period of time, but for the purposes of this exercise, I just kept the fund to 11 years. It's what you'd expect. Exits are $250mm.

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

Growthink Blog

JANUARY 24, 2011

The liquidation preference means what is sounds - namely that preferred stock holders with this right get all of their money back (i.e. liquidate their shares) before any distribution of proceeds in the event of a sale of a company. This is an extremely valuable preference that can best be shown by example.

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

Gust

APRIL 11, 2014

Entrepreneurs frequently think of equity primarily in terms of percentages such as 50/50 or 40/40/20 — not necessarily a bad idea at inception, or even throughout the lifecycle of a traditional business, such as real estate, where cash distributions, capital contributions, and allocations of profit or loss for tax purposes can be made accordingly.

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Startup Lessons Learned

JUNE 19, 2019

So the venture process was all about trying to figure out whether or not people could deliver what they said they could, and you typically invested as early as possible at a $5 million pre-money valuation, hoping the company would be worth $500 million, in which case you'd make 20 to 30 times your money.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

ithacaVC

DECEMBER 14, 2011

With respect to the Series C round, let’s assume that the pre-money valuation is $12 million and that the VC investing is going to put in $4mm (and to keep things simple, let’s have only 1 Series C investor). Therefore, the new Series C investor would own 25% of the company post money ($4mm/($12mm + $4mm)). .

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49