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Equity for Early Employees in Early Stage Startups

SoCal CTO

I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup.

Unusual Rounds of Early-Stage Funding & What to Know

Genuine VC

raised, the first non-friends-and-family capital, comprised of one to three institutional seed investors or larger VC funds, on a priced equity structure (though sometimes convertible note), with a valuation mechanism in place priced in the single digit millions. Find the original post  here.

The Importance of Proprietary Deal Flow in Early-Stage VC

Both Sides of the Table

What stage? sorted out pretty early that lawyers were a great source of deal flow. We are judging how well you are coached on stage.

Valuation Part I: Peeling the Onion, or How Top Investors Value the Startups They Invest In

Gust

Early-stage technology company valuations are generally a crap-shoot. How To Fundraise Starting Your Company valuation valuation

(First Annual?) List of Go-To Early-Stage Service Providers in the NextView Ventures Boston Portfolio

Genuine VC

Although these startups are very diverse businesses themselves, they face similar requirements (especially in that they’re currently all in the seed to Series B range of company stage). Recently, we surveyed our Boston-based NextView portfolio Founder/CEOs asking them about which service provider firms they’ve been using.

Valuations 101: Scorecard Valuation Methodology

Gust

These angel investors generally invest $25,000 to $100,000 in a round totaling $250,000 to $1,000,000.  In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Scorecard Valuation Methodology. As can be seen the average (mean) pre-money valuation for recent pre-revenue deals is $2.1

When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

Or, in the case of a convertible note, they’ll explicitly state a valuation cap. Building a startup and currently in the seed stage?

8 Ways To Get Off The Ground With Angel Investors

Startup Professionals Musings

The business plan should address all key questions, including valuation, funding needed, use of funds and exit strategy. alone.

10 Rules of Thumb for Startup Investment Valuation

Gust

How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

10 Rules of Thumb for Startup Investment Valuation

Startup Professionals Musings

How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

Startup Valuation: How Much Is Your Company Worth?

Seed Stage Capital

skip to main | skip to sidebar 19 January 2010 Startup Valuation: How Much Is Your Company Worth? They dazzle. It is analogous to a make-vs.-buy

The Truth About Early Stage Pre-Money Valuations

Ask the Angels

think there are three fundamental truths regarding the valuation of early stage businesses by potential investors: The first is that a pre-money valuation is ultimately an outcome of negotiation , rather than a mathematical calculation of discounted cash flow or any other metric of potential company performance.

How we determine valuations for marketplaces

Version One Ventures

I often get asked about how to determine the valuation for a marketplace startup that is starting to scale. YoY growth of at least 30%.

What Startups Need To Know About Business Valuation

YoungUpstarts

This is where a qualified business valuation professional comes in – he or she can determine the fair market value of the underlying stock.

8 things to consider when determining your startup valuation

The Next Web

Setting a valuation for an early-stage startup looking to raise money is tough. In regards to your market?

AngelList Syndicates: Why Pooling Resources Is Good for Early Stage Investing

Fresh Inc.: The Staff Blog

It’s an innovative, new method for early investing that affects the way companies can get funded. for syndicates.

Early stage money: The problem with PPMs

Berkonomics

By Bill Payne. Bill Payne has been actively involved in angel investing since 1980, funding over 50 companies and mentoring over 100 more.

Convertible Debt – Valuation Caps

Ask The VC

Today, in our series on convertible debt, we examine the conversion valuation cap. The valuation cap is typically only seen in seed rounds where the investors are concerned that the next round of financing will be at a price that is at a valuation that wouldn’t reward them appropriately for taking a risk by investing early in the seed round.

The Berkus Method: Valuing an Early Stage Investment.

Berkonomics

For those of us who’ve invested in early stage companies, especially technology startups, we have confronted a universal problem.  Note that these numbers are maximums that can be “earned” to form a valuation, allowing for a pre-revenue valuation of up to $2 million (or a post rollout value of up to $2.5 Ignition!

Startup Valuations: 7 Things to Look for in a Valuation Company

Early Growth Financial Services

Valuation. What you may not know is that it really does matter who performs your valuation. There are a lot of valuation companies out there, so I know many entrepreneurs are tempted to just shop around until they find the lowest price, but this is a mistake. valuation is more than just a commodity. You know you need one.

A Five-Minute Tutorial On How To Value Your Startup

Startup Professionals Musings

Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.” reveneue Shark Tank startup valuation

What Is a SAFE? A Closer Look at The Simple Agreement for Future Equity

Early Growth Financial Services

SAFEs usually appear around the seed stage of funding, as it gives founders the chance to raise funding without having to begin the process of setting a valuation or issuing convertible notes. Convertible debt is a staple in startup funding. But sometimes the complexity and costs outweigh the benefits.

Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

This starts with understanding how VCs and entrepreneurs often see valuation differently. Those were the dog days of entrepreneurship. Normal.

2011 Valuation Survey of North American Angel Groups

Angel Investing News

During the summer of 2010, I developed a workshop, A New ACEF Valuation Workshop for Angels and Entrepreneurs.  To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies.  2011 Angel Group Valuation Survey.

How valuations are really determined at the seed stage?

Hippoland

Valuation is a nebulous topic amongst early stage startups, so I thought I’d really spell it out in detail.   In short: Valuations for seed stage companies are fairly arbitrary and driven solely by supply and demand. Your startup’s valuation is not based on a proforma of your revenue.

How Investors Think About Valuation of Pre-Revenue Startups

SoCal CTO

A lot of my time is spent helping early-stage companies get to proof points so that they can raise capital. They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). Bill Payne is an expert on how early-stage investors should look at valuation.

Pattern recognition

Seth Levine's VC Adventure

But what’s going on right now with early stage company valuations suggests that VCs may be poor judges of at least some of these patterns. Company X raises money at a high valuation and the markets shift their perception of the clearing price for deals of that type. In reality, DC is a city of over 600,000 people.

DC 22

The Berkus Method: Valuing an Early Stage Investment

Angel Investing News

Dave Berkus has just published the most recent version of his method for establishing a pre-money valuation for early stage companies.  See his blog at The Berkus Method: Valuing an Early Stage Investment. Valuation David Berkus Method valuation

2011 Valuation Survey of North American Angel Groups

Gust

During the summer of 2010, I developed a workshop,  A New ACEF Valuation Workshop for Angels and Entrepreneurs.  To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies.  2011 Angel Group Valuation Survey.

Raising Money Using Customer Development

Steve Blank

Unfortunately in early stage startups the drive for financing hijacks the corporate DNA and becomes the raison d’etre of the company.

Early Growth Financial Services (EGFS) Launches JumpStart Program for Early-Stage Startups

Early Growth Financial Services

Outsourced financial services firm adds low-priced, fixed cost offering to their suite of financial services to help support very early-stage startups nationwide. JumpStart was designed specifically for very early-stage startups, to provide essential financial services and build a solid financial foundation for young companies.

Startup Valuations – Again….

ithacaVC

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. There’s a reason it’s so difficult to figure out – valuations have little basis in reality for early stage companies.

Some thoughts on your ABBA round

Seth Levine's VC Adventure

As valuations have risen (become “frothy” in VC speak, which is our nice way of saying “too high”) companies have started raising much larger Series A rounds. Uncategorized cash burn company financings early stage valuationsBut that’s not what I want to talk about. I Maybe significantly.

Early Stage Investing Take 2: CBInsights Updates Their Funnel and We Update Our Model

Dshen

It was a sobering result which showed that valuation matters at early stage if you want some chance at making money.

10 Leadership Elements That Maximize Business Value

Startup Professionals Musings

entrepreneur leadership capital startup valuationIn the investment community, these leadership elements are often called “goodwill.”

Gust Launches Comprehensive Equity Management Platform for Cap Table Management and 409A Valuations

Gust

Gust announces acquisitions of Sharewave and Preferred Return; creates the most robust and affordable equity management solution for early-stage startups. The new platform provides early-stage companies with powerful. Gust News Starting Your Company 409A valuations cap table management equity managementRead more >.

Color: $98M Post-Money Valuation?

Texas Startup Blog

The company raised $41 million from Sequoia and other investors at a post-money valuation of $98 million. Color.xxx Pitch Deck. Venture Capita

Convertible Debt, Priced Equity Rounds and Deal Timing

Gust

An impromptu Twitter debate arose among Fred Wilson, Dave McClure, Mark Suster, Chris Dixon and others about convertible debt, priced equity rounds, and the nuances of early stage financing.

Are True Early Stage Investors an Endangered Species?

VC Deal Lawyer

I think we can all agree that early stage investing has changed significantly over the past 10 years and I don’t see it reversing any time soon.  This gap straddles two stages of financing - seed stage and early stage.  This early stage gap is a problem that desperately needs a solution. 

Startup Blog: Decisions, Decisions, Decisions ? Second Guessing

Taffy Williams

It is always easy to decide to switch when you believe you will increase the valuation of your business. What are your thoughts on this? Stuck?