Both Sides of the Table

JUNE 5, 2011

I raised my A round at a $31.5 million post-money valuation with no revenue. We had companies pitching us that had almost no revenue at all and they were raising $10-15 million in capital at a $40-50 million pre-money valuation. It was early 2000. That was market.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! New investors hate down rounds. It’s what I love about entrepreneurship and about venture capital. I said that at the Founder Showcase, too. The fact that today’s Internet bubble does not represent all companies does not disprove its existence.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Berkonomics

AUGUST 3, 2023

This class of investor, once quite disorganized, has become much like the venture capital community, creating a process including due diligence (careful examination of a business before investment), terms of investment that match those of venture capitalists, and a process that sometimes takes months from introduction to investment.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

VC Cafe

FEBRUARY 27, 2024

A founder asked me what makes a $2M round “pre-seed”? especially if the startup already has a product and revenue? And why do we still sometimes hear about pre-seed rounds that look more like a series A in pricing and size?

Valuation 186

Valuation Software Review Generative AI Technical Review 186

YoungUpstarts

JUNE 26, 2020

Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. When a VC’s website says they do “early stage” – to a VC that means a product has already been built and generating some revenue, while to an entrepreneur it means “just an idea.”. Who is in your tribe?

Finance 205

Finance Silicon Valley Valuation Startup 205

Scalable Startup

JANUARY 27, 2011

And by growth I mean revenue growth. Flat to negative revenue growth is a real red flag, especially for early stage companies. If you’re venture funded, things get kind of ugly -unhappy board members, cut off from communications, down- rounds to keep you going, or no more funding. And protection form death.

Revenue 22

Revenue Early Stage Down Round Software Review 22

The Equity Kicker

JANUARY 22, 2014

You decide you’re ready to scale and raise millions, so you pitch big venture funds on a big growth story. To meet growth and revenue targets, you hire and spend like never before. Startup general interest Venture Capital' Investors pay a high valuation to get into a good deal, betting on continued fast growth.

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

Growthink Blog

MAY 23, 2011

With this seed capital – more often than not totaling between $100,000 and $1,000,000 - the company accomplishes a number of key technical milestones, gets a beta customer or two, and then goes on a "road show" to venture capitalists around the country for capital to “scale” the business. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

VC Cafe

JUNE 10, 2022

For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. It’s becoming evident that there’s a slow down in VC investments in Q2 deal activity, but it’s not as drastic as in the early days of the pandemic.

Valuation 152

Valuation Marketing Venture Capital 152

Berkonomics

JUNE 8, 2017

This class of investor, once quite disorganized, has become much like the venture capital community, creating a process including due diligence (careful examination of a business before investment), terms of investment that match those of venture capitalists, and a process that often takes.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? We raised a seed round. You’ll find out the minimum when the next round is raised. How will you price the next round? Your A round? Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Hippoland

NOVEMBER 13, 2016

The #1 problem with the venture capital game, in general, is that *actual success* is measured over decades not years. If a company raises a good round, it gets marked up to the new value. And if a company takes a down-round, it gets marked down. Equity rounds of $10m pre.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) Sales people cost money, and when they’re not bringing in revenue, their wandering in the woods is time consuming, cash-draining and demoralizing.

Lean 244

Lean Silicon Valley Startup RSS 244

Both Sides of the Table

SEPTEMBER 27, 2010

There are real changes in the venture capital industry and it would have been fun to talk about them. They raised at $40 million pre-money for pre-revenue companies and when the economy corrected it became hard for them to refinance themselves. Answer: Not much. And that was evident on today’s Angel vs. VC panel.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

VC Cafe

SEPTEMBER 26, 2022

Many startups that raised money in 2021 on inflated valuations that were detached from their actual value, are struggling to raise up-rounds and face difficult choices these days: down rounds, early sellout or failing altogether. A good way to think about valuation in seed/pre-seed is to reverse engineer the next round.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Feld Thoughts

SEPTEMBER 9, 2015

Some will demonstrate strategically justifiable metrics and have fantastic ‘up round’ exits; others may see liquidation preferences kick in which will negatively impact founders and employees; others may fulfill the adage “IPO is the new down round” , which has been the case for more than half of the public companies on our list.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

VC Cafe

JANUARY 2, 2023

As Fred Wilson put in in his post ‘What will happen in 2023’ “I believe that ‘new normal’ is more or less where we were in 2015 where seed rounds were done around $10mm, A rounds were done around $15mm to $25mm, B rounds were done around $25mm to $50mm, and growth rounds had a cap at 10x revenues.”

Valuation 159

Valuation Down Round Venture Capital 159

Altgate

MARCH 8, 2009

Growth stage investors are usually the Series B or C investors who come in when the product is in the market but there is little or no revenue and the team is probably in the 20-something range with the goal to ramp it up to 40-50 employees with the new money, build out a sales team, etc.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

Berkonomics

JANUARY 20, 2010

This class of investor, once quite disorganized, has become much like the venture capital community, creating a process including due diligence (careful examination of a business before investment), terms of investment that match those of venture capitalists, and a process that often takes months from introduction to investment.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. About this same point in time, the journalists that focus specifically on the venture capital industry noted something quite profound. Competition also has access to capital.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

VC Cafe

NOVEMBER 30, 2022

Companies have raised record amounts of venture capital money in 2020 and 2021. Much of that capital is still sitting on companies balance sheets, but the pace of venture capital deployment was down 50% in Q3 2022 in the US and 44% down in Europe. In 2021, a new unicorn was created every 3 days.

Europe 97

Europe Balance Sheet Valuation 97

Both Sides of the Table

FEBRUARY 14, 2016

Put simply, it’s really hard to build a strong company when all of your competitors are giving away free s**t fueled by venture capital chasing winner-take-all returns. forward revenue for SaaS businesses when in the years before it had been less than 5x. Why Down Rounds are Harder Than You May Think.

Valuation 150

Valuation Down Round Startup Later Stage 150

This is going to be BIG.

SEPTEMBER 7, 2012

In the late 90's, it wasn't surprising that companies with no revenue that were funded at 100 million dollar valuations didn't survive. That wasn't a bubble bursting issue--that was a poor financing strategy issue of people getting caught with their pants down, hands in the cookie jar, and all the metaphors you can think of at once.

Later Stage 99

Later Stage Down Round Pre-Money Valuation Early Stage 99

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. Venture Capital Funds VC firms are like seed firms in that theyre actual companies, butthey invest other peoples money, and much larger amounts of it.VC Down rounds are bad news; it is generally the common stockholders who take the hit.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

VC Cafe

MAY 18, 2022

venture capital and private equity) the VC index (by Refinitiv) shows a nearly 40% decline. While Q1 2022 looked normal, in venture, there’s a lagging effect in pricing, and deals that get announced in Q1 and even early Q2 2022 might have been signed in Q4 2021. Down rounds are coming. Multiples by vertical.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

Both Sides of the Table

OCTOBER 18, 2015

There is a lot of uncertainty about the state of the private, high-growth technology markets and the venture capital markets that underpin them. Technology riches yield bumper crops in venture capital with new firms and new largesses – the rewards of LPs rediscovering our asset class. 25% “down rounds?

IPO 150

IPO Venture Capital LP SEC 150