VC Cafe

FEBRUARY 27, 2023

For the past 10 years, with interest rates near zero, VC investors plowed record amounts into tech startups and enjoyed a seemingly ‘easy’ investing environment. Prices went up from round to round, and startups were encouraged to grow, grow, grow, and not to worry about profitability.

Venture Capital 215

Venture Capital Technical Review LP Institutional Investors 215

Steve Blank

APRIL 26, 2022

Cram downs are back – and I’m keeping a list. At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. A cram down is different than a down round. Cram downs are done by VC bottom feeders.

Cram Down 404

Cram Down Founder Venture Capital Recapitalization 404

Startup Professionals Musings

AUGUST 6, 2023

Now there are dozens of online equity portals, including WeFunder and Microventures , already geared up to help regular people buy equity in a startup, without qualifying as an accredited investor. Have you ever wondered what professional startup investors think about all this? Lack of checks and balances on startup valuations.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

Startup Professionals Musings

NOVEMBER 25, 2020

Now there are dozens of online equity portals, including WeFunder and Microventures , already geared up to help regular people buy equity in a startup, without qualifying as an accredited investor. Have you ever wondered what professional startup investors think about all this? Lack of checks and balances on startup valuations.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. Myth #3: Take the Highest Valuation You Can Get. Well not, wrong exactly.

Finance 205

Finance Silicon Valley Valuation Startup 205

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

VC Cafe

MAY 29, 2022

Building on my post on ‘ Advice for startups in a downturn (May 2022 edition) ‘, this week I continued to follow with interest the impact of the current correction on startups and venture capital, particularly in early stage. Which Startup Investors Pulled Back The Most So Far In 2022? The bull market is over.

Venture Capital 184

Venture Capital Early Stage Valuation Startup 184

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. This is a little tricky in early rounds and with modest up-round financings, as you’ll often have a liquidation preference that is high relative to your overall valuation. Go read it now – I’ll wait.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

ithacaVC

NOVEMBER 14, 2014

I have written about startup valuations previously. If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. A founder is about to raise their first round and asking me how to value their company. [1].

Valuation 69

Valuation Startup Down Round Early Stage 69

Both Sides of the Table

JUNE 22, 2011

In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. million pre-money valuation is now raising $1 million at a $12 million valuation the next investor has nowhere to go but up (or sit out the investment).

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Berkonomics

MARCH 5, 2020

So, it is important for the entrepreneur to identify, address and mitigate each of these in order to increase valuation and decrease the risk of ultimate loss of the business. Reduction or elimination of one or more of these risks increases the valuation of the company and certainly improves its chances of survival and growth.

Valuation 62

Valuation Down Round Early Stage Demand 62

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Hunter Walker

AUGUST 8, 2023

At the time, this is last quarter and the stock market has trended upwards nicely since then (a potential leading indicator of private tech valuations), we all agreed venture portfolios were probably still 25-40% overvalued. Valuations. Restructures, Down Rounds, and Pay to Plays.

Portfolio 98

Portfolio Cap Table LP Valuation 98

Both Sides of the Table

SEPTEMBER 18, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. How do you think they’ll feel if your next round is at a $50 million post money valuation and their hard-earned $25,000 is worth 0.05% of your company? People seem concerned about valuation.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Lightspeed Venture Partners

OCTOBER 7, 2012

That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors. As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. The last company was a bit of a puzzler.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

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? Defining the pre-seed round It’s futile to look for ‘one true’ definition.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

VC Cafe

OCTOBER 31, 2022

It’s a tough time for a lot of startup founders right now. Many companies are now having to resort to tough measures in order to stay afloat, including layoffs, down rounds and tough terms from current investors. The pressure to protect portfolio startups seen as potential fund returners will be profound.

Founder 174

Founder Technical Review Down Round Liquidation Preference 174

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Startup Professionals Musings

MAY 20, 2016

At least ten online portals are already gearing up to help regular people buy startup equity, without abiding by accredited investor rules. Have you ever wondered what professional startup investors think about all this? Lack of checks and balances on startup valuations. Risk is increased.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Feld Thoughts

APRIL 21, 2016

Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness? Long term is not a year. It’s not two years. It could be a decade.

Marketing 70

Marketing Down Round Startup IRR 70

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. How to pump up your VC valuation. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed. 10,000,000.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. A combination of competition for top talent and an effort to bring employees back to the office drove startups in Israel to throw extravagant parties and all-inclusive retreats abroad.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Tags: entrepreneur startup angel investment term sheet business.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. But some dilution is almost inevitable.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

The Equity Kicker

JANUARY 25, 2016

On Friday it seemed like everyone in the venture capital industry was again reading about market turmoil, this time the news is that angel investors are pulling back and valuations taking a hit. The best startups capture all the returns so focusing too much on entry valuation is a mistake.

Venture Capital 60

Venture Capital Angel Investor Startup Participating Preferred 60

The Equity Kicker

MARCH 24, 2015

Everyone loves a high valuation and it’s natural for founders to want to minimise dilution. They will most probably go on to raise multiple rounds of venture capital after all. YC’s Sam Altman explained why in a post last year: Startups are usually a pass-fail course — either you succeed or you don’t.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

View from Seed

FEBRUARY 19, 2015

Below, he gives an honest take about what he’d do differently and what he’d do again as a startup CEO. Now that Backupify has had a nice exit and my life is in a different place, I agreed to write this post, full of my own advice based on my experience as a startup CEO. Startups are incredibly hard. Keep at it.

Founder 120

Founder Startup Cofounder Business Model 120

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. In short, they own a smaller piece of a larger valuation pie. causing valuation bumps.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

Both Sides of the Table

FEBRUARY 8, 2016

Much has changed in the past four months of the technology startup world and how outsiders value the business. As we noted in our survey of more than 150 VCs we know in the industry, many saw drops in Q4 valuations last year with nearly all of them projecting decreases in 2016. Down rounds are corrosive. Start early.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

The Equity Kicker

NOVEMBER 20, 2015

Match closed up 23% at a valuation of $3.5bn and Square was up 45% at a valuation of $4.2bn. However in the run up to its IPO Square had indicated it would go out at between $11 and $13 per share, and then ended up at $9, and in October last year Square raised $150m at a $6bn valuation.

IPO 60

IPO Matching Ratchet Valuation 60

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. You probably thought that valuations would be roughly the same as they were the last time you raised money. Yes, we did a down round. Outkast, Ms.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

The Equity Kicker

JANUARY 22, 2014

It all comes down to probabilities in the end – anyone can get lucky – the trick is getting a handle on how lucky your plan requires you to be… The article describes how it goes wrong in two ways, firstly: Your company is growing and scaling well, often on little invested capital. Startup general interest Venture Capital'

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

VC Cafe

JUNE 10, 2022

The market correction has come for series A and seed startups. 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. Until now, early stage startups were relatively unaffected. How quickly should startups scale?

Valuation 152

Valuation Marketing Venture Capital 152

Hippoland

NOVEMBER 13, 2016

It takes a long time to see the results of a startup that does well. But as we’ve seen, these valuations can be hocus-pocus — even at later stage rounds, we’ve seen lots of companies of late fall from grace and become massively devalued overnight when they cannot raise their next round at a higher valuation.

IRR 48

IRR Valuation Portfolio Due Diligence 48

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

Tim Keane

SEPTEMBER 17, 2009

Startups and angels: Along the way to success.  (WAN is a trade group of angel organizations in Wisconsin; I'm on their board.)  Joe, a friend and colleague, is writing about the "great deals" in venture valuations that have been created by economic conditions. « Are Investors Being Unreasonable?

Wisconsin 60

Wisconsin Valuation Angel Investor Startup 60