VC Cafe

SEPTEMBER 26, 2022

ValuatIon should be a function of value, not ego. Kawasaki’s Law of Pre-Money Valuation: for every full-time engineer, add $500,000; for every full-time M.B.A., But valuations, especially those in the private market, are not necessarily a predictor of growth/ success. Our goals, their goals. subtract $250,000. 9M Seed: $20M ?

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

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

ReadWriteStart

JANUARY 13, 2024

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

VC Cafe

FEBRUARY 27, 2023

Seed and pre-Seed investment levels and valuations remain healthy, there’s more talent in the market and less competition. The result is mass layoffs (over 119,000 in the US since the beginning of 2023 and it’s only Feb), down rounds (even for Silicon Valley darlings like Stripe) and fund terms that go above the 2/20 standard.

Venture Capital 215

Venture Capital Technical Review LP Institutional Investors 215

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

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. This article previously appeared in TechCrunch. They’re Back.

Cram Down 404

Cram Down Founder Venture Capital Recapitalization 404

Startup Professionals Musings

AUGUST 6, 2023

Lack of checks and balances on startup valuations. A startup that is listed on a crowdfunding platform gets no formal pushback or negotiation on its declared valuation. Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

Feld Thoughts

FEBRUARY 9, 2016

There are three things that will mess you up in the long run: Too much liquidation preference : My simple rule of thumb is that if you’ve raised more than $25m and your liquidation preference is greater than 50% of your post money valuation, you have too much liquidation preference.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Startup Professionals Musings

NOVEMBER 25, 2020

Lack of checks and balances on startup valuations. A startup that is listed on a crowdfunding platform gets no formal pushback or negotiation on its declared valuation. Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

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

JANUARY 2, 2023

There are 85 Israeli unicorns, but only about 50% them justify a billion Dollar valuation, according to Viola’s report. As growth investments (and valuations) go down, unicorns might struggle to survive, according to Globes. Large LPs are signalling the need to slow down, and funds realise it may take longer to fundraise.

Valuation 158

Valuation Down Round Venture Capital 158

ReadWriteStart

JUNE 1, 2020

The bridge or exit stage is generally of very large transactions and for companies with substantial valuation. The essential components of your pitch include a comprehensive business plan with projections of 5 years along with investment offerings and estimated valuations. Point number 3: Never raise money with an increased valuation.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

VC Cafe

JANUARY 29, 2024

That’s the case for most companies that are already in the market, especially if they raised funding at imaginary valuations before. Dealroom global tech report ( source ) As a result, 2023 has also seen a 43% decline in mega rounds of over $100M, though they still exist. In many ways, Edward is right.

Generative AI 171

Generative AI Global Venture Capital Valuation 171

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

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

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]. Valuations of other companies like you.

Valuation 69

Valuation Startup Down Round Early Stage 69

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Myth #3: Take the Highest Valuation You Can Get. Valuation is a touchy subject for most entrepreneurs. They seem to take it personally when an investor isn’t willing to negotiate on valuation.

Finance 205

Finance Silicon Valley Valuation Startup 205

VC Cafe

NOVEMBER 30, 2022

According to Pitchbook’s Q3 2022 European VC Valuations Report , Europe minted 40 unicorns in the first 3 quarters of 2022. Atomico’s founder Nicklas Zennstrom recently called the end of the high valuations era and urged founders and VCs to remove the stigma from down rounds.

Europe 97

Europe Balance Sheet Valuation 97

VC Cafe

MAY 29, 2022

I’ll take the opportunity to share a nugget by Konvoy Ventures on the current impact they’re observing across stages in the next 12 months: Pre-Seed / Seed: These rounds will be impacted the least and will generally continue to be filled and oversubscribed. The key messages: “This is not a time to panic.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

ReadWriteStart

NOVEMBER 22, 2010

The survey looks at the valuations and the terms of financing for over 100 technology companies in Silicon Valley that reported raising capital in the third quarter of this year. And not surprisingly, perhaps, the survey found that valuations are up. The full survey can be downloaded here.

Silicon Valley 115

Silicon Valley Venture Capital Valuation Down Round 115

VC Cafe

MAY 18, 2022

It's not "cheap" because it is down 70%. 2) Valuation multiples are always a hack proxy. Down rounds are coming. Re-evaluate your valuation. If they’re down 60%, there’s a good chance you’re in a similar position. 1) Previous "all-time" highs are completely irrelevant. Dangerous to use.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

Berkonomics

AUGUST 3, 2023

My experience with early valuations by founders for friends… I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round and had to “clean up” the cap table more than a few times over the years.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

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

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

Bryce Dot VC

APRIL 19, 2016

Many of the companies with notes we evaluated had valuation caps on them; meaning, if the new investor priced the round higher than the cap the seed investors would reap the benefits of a lower valuation given the earlier risk they’d taken. Caps are not valuations, they are aspirational and are designed to be grown into.

Valuation 40

Valuation Down Round Equity Conversion 40

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

Berkonomics

MARCH 15, 2012

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 80

Valuation Down Round Demand Management 80

www.mattbartus.com

DECEMBER 9, 2012

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. You have a 20% option pool, so you know this will take your ownership down from 80% to 60%, and the VC will get 25%. — 23 Comments.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Berkonomics

OCTOBER 18, 2018

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO. Investor loyalty is most tenuous of all.

Valuation 96

Valuation Dilution Down Round Employee 96

Both Sides of the Table

FEBRUARY 4, 2016

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. Median pre-money valuations skyrocketed – shooting up 3x in just three years as investors competed to christen imaginary animals with imaginary valuations. So what happened?

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

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

Startup Professionals Musings

MAY 20, 2016

Lack of checks and balances on startup valuations. A startup that is listed on a crowdfunding platform gets no formal pushback or negotiation on its declared valuation. Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

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. Seat on the board. But some dilution is almost inevitable.

Term Sheet 227

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

Gust

SEPTEMBER 17, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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. The biggest problem comes from chasing high valuations. But I’ll say it again: trying to get really high valuations is a mistake.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

Ben's Blog

JULY 16, 2013

You probably thought that valuations would be roughly the same as they were the last time you raised money. And those are big companies with real earnings, so you can imagine how a private company’s valuation might fluctuate. In June of 2000, I raised money at an $820M post-money valuation. Yes, we did a down round.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

ithacaVC

FEBRUARY 1, 2018

If FFAs only invest at the beginning and do not make any follow on investments as the company raises more $$ then the only real way FFAs make money when the company is ultimately sold is if the company keeps raising future rounds at higher and higher valuations (and IPO exit may provide upside if the stock price increases over time after the IPO).

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45