Startup Professionals Musings

SEPTEMBER 6, 2010

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage blogs and other resources, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? All principals and employees add value.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. Employee options pools, typically created at the point of financings, shouldn’t be treated as haggling over dilution, but rather a strategic resource that will help founders build the best team and, by extension, a more valuable company.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Tim Keane

JANUARY 12, 2010

When companies seeking their first round of serious funding are good enough to receive a term-sheet from an investor, the first issue that always arises is valuation.   For individual angels and others investing their own money, this may be more fluid than for someone with responsibility for a managed fund.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. So co-management is the second group to share in the bounty upon a liquidity event.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

ithacaVC

MARCH 11, 2016

Here goes: please do NOT think that the 409A valuation has any bearing or meaningful relationship to how a VC will value your company. Said another way, a 409A valuation is meaningless to how VCs negotiate pre-money valuations for their investments. The 409A valuation is not based in VC reality.

Pre-Money Valuation 40

Pre-Money Valuation Stock Options Valuation Later Stage 40

Professor VC

JANUARY 17, 2008

Again, I see nothing wrong with this, although entrepreneurs often prefer convertible debt as it defers the valuation discussion and leaves the Series A price for the venture firm to set. He also said they typically only invest at a $1 million pre-money valuation or less.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

VC Cafe

SEPTEMBER 26, 2022

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. The press took notice, especially since just a few months later startups were laying off employees en-masse to cut costs. Our goals, their goals.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

The Startup Lawyer

AUGUST 12, 2010

Occassionally, a startup will get a term sheet from an angel with a pre-money valuation less than the investment amount (i.e., Most angels have the ability to make an angel investment in your startup because they successfully managed/owned/exited a company or ten. the angel wants control of the startup).

Pre-Money Valuation 76

Pre-Money Valuation Angel Investor Term Sheet Valuation 76

Up and Running

SEPTEMBER 20, 2021

A cap table will help you in the strategic management of business decisions. For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. This is all incorporated into a document called a Cap Table. . Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

dondodge.typepad.com

JANUARY 15, 2011

Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees? Should I take Angel or VC money? How much money should I raise? How much equity should I grant to early employees? How much money should I take? 5% Managers -.25% 5% Managers -.25%

Equity 40

Equity Employee Dilution Valuation 40

Professor VC

FEBRUARY 12, 2015

It''s previous financing round was a little over a year prior to the IPO and was a $8M raise at a $60M pre-money valuation led by John Doerr of Kleiner Perkins. Those that managed companies in 2008 or thirteen years ago in 2001 know exactly how fear feels. or a market cap of $800M. And this is not it."

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

K9 Ventures

MAY 14, 2011

The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000). The institutional funds typically manage a relatively large pot of capital (~$300M or higher per fund, with multiple funds running).

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

www.paulgraham.com

APRIL 28, 2010

And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. Apparently our situation was not unusual.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

venturehacks.com

OCTOBER 21, 2010

If you don’t keep your eyes on the option pool while you’re negotiating valuation, your investors will have you playing (and losing) a game that we like to call: Option Pool Shuffle You have successfully negotiated a $2M investment on a $8M pre-money valuation by pitting the famous Blue Shirt Capital against Herd Mentality Management.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

www.paulgraham.com

OCTOBER 23, 2010

The middle managers we talked to at catalog companies saw the Web not as an opportunity, but assomething that meant more work for them. If you give an investor new shares equal to 5% ofthose already outstanding in return for $100,000, then youve donethe deal at a pre-money valuation of $2 million. Thereis no rational way.

Startup 105

Startup Cofounder Software Stock 105

ithacaVC

NOVEMBER 1, 2011

Normally employee options vest over 4 years, with 25% vesting after year 1 and then the balance pro rata (monthly or quarterly) over the remaining 3 years. This allows the acquiror to NOT be burdened with employee options of the selling company. I am probably not in the majority of VCs on this topic. Quick background: 1.

Vesting 60

Vesting Pre-Money Valuation Liquidation Preference Stock Options 60

www.paulgraham.com

APRIL 28, 2010

2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get. Ifyou put $50,000 into a company at a pre-money valuation of $1million, then the post-money valuation is $1.05

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63

Startup Lessons Learned

JUNE 19, 2019

Wealthfront , which began as an automated investment management service and has since expanded into banking (it currently offers one of the highest interest rates on FDIC-insured cash accounts), now manages almost $15 billion in assets. That's really, really hard for inexperienced employees to get. So what’s the solve for that?

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159