Gust

NOVEMBER 7, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. This calculator uses 25 questions to size up the progress of the new venture and calculate a pre-money valuation for investment purposes.

Valuation 87

Valuation Pre-Money Valuation Venture Capital Technical Review 87

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. I have conversations with entrepreneurs and other VCs on a daily basis about fund raising, the prices of deals, how much companies should raise, etc. You can be pissed off, but I don’t set prices. That’s stupid.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

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. 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., 9M Seed: $20M

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Both Sides of the Table

SEPTEMBER 10, 2021

I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. On the one hand, you’re over paying for every investment and valuations aren’t rational. Seed has become an option factory for many.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

MAY 28, 2018

VCs tend not to want to fund founders who raise too much money in a given round also because they know that sometimes having too many resources will lead to founders burning through cash too quickly. One entrepreneur refrain I sometimes hear is “We want to raise some extra money for M&A activities.”

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Berkonomics

JUNE 5, 2014

Dave’s note: Popular Bill Payne returns this week with a thoughtful take on valuations. One entrepreneur has a company which appears to be scalable to a $30 million exit value in five to eight years, and a second entrepreneur’s venture seems to be scalable to $200 million in exit value in the same time frame.

Pre-Money Valuation 92

Pre-Money Valuation Valuation Angel Investor Dilution 92

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Startup Professionals Musings

NOVEMBER 26, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Both Sides of the Table

JULY 23, 2014

We are in a bubble (with so many private $1bn+ valuations). pre-money valuation you certainly would want to exercise your right to continue investing if you had prorata rights. Where are we today? Just 3 years ago there was talk of institutional investors “not being able to write small enough checks.”

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

View from Seed

OCTOBER 21, 2014

In short, more and more entrepreneurs are signaling their price expectations earlier in their seed fundraise process. Or, in the case of a convertible note, they’ll explicitly state a valuation cap. In theory, there are three levels of pricing for an entrepreneur to potentially signal to a prospective investor: 1.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

ReadWriteStart

OCTOBER 7, 2010

Before I do, however, I want to talk about a thumb rule that I'd like to propose to entrepreneurs about raising money. So at any point, if you are trying to raise money, and you are hearing from investors that you are too early and have too little validation, it may be a good thing. I encouraged Todd to keep building.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

Agile VC

APRIL 17, 2011

Post-money valuation probably no higher than $12M (2). Pre-money valuation was initially set higher but was adjusted to match the Ser B valuation. Pre-money valuation was approx. Pre-money valuation was approx. Pre-money valuation was at least $250M (2).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. Background: Adam Carlson is a serial entrepreneur who has successfully raised private capital at three different technology startups.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Berkonomics

JANUARY 28, 2021

I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up pre-money valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road. The post Don’t get hung up on early stage valuation.

Early Stage 62

Early Stage Valuation Pre-Money Valuation Cofounder 62

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, playing coy, or quoting an exorbitant number.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Both Sides of the Table

JUNE 22, 2011

This was an audience of mostly first-time entrepreneurs. It is great for entrepreneurs and great for VCs. So here is what I have been telling entrepreneurs privately for the past 6 months. And this is happening in mezzanine (pre-IPO) deals as well. I believe that. I will write more about this in the next 2 weeks.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. Unsurprisingly, all the sharks passed, based on market size and valuation expectations. Shelton came under intense questioning about how she justified her valuation given no proof of demand.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

Both Sides of the Table

SEPTEMBER 5, 2012

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Gust

JULY 23, 2014

So even if my own mother asked me to meet with you, and you were pitching me a biotech opportunity for a $10 million investment at a $90 million valuation, I might take the meeting, but it wouldn’t be particularly useful for either of us. In this case, it’s not a lack of interest, just a lack of time and efficiency.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Gust

OCTOBER 12, 2011

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.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

The Equity Kicker

APRIL 10, 2015

A few of them have done good up rounds and the easiest way to describe the magnitude is to talk about the valuation multiple. As a refresher, the post-money valuation is calculated as the pre-money valuation plus the amount of money invested.). (As

Valuation 60

Valuation Pre-Money Valuation Post-Money Valuation Option Pool 60

Both Sides of the Table

SEPTEMBER 29, 2009

But any entrepreneurs raising capital should keep in mind that this opening of the markets could possibly be temporary. They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Market downturn – We all know that investors move in herds.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Altgate

DECEMBER 16, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Pre-Money Valuation vs Number of Founders Where Do Tech VCs Invest? But first, let’s look at pre-money valuation by liquidation preference.

Liquidation Preference 39

Liquidation Preference Pre-Money Valuation Term Sheet Valuation 39

Both Sides of the Table

FEBRUARY 25, 2010

A reminder that it is important for all entrepreneurs is to remember to be careful about “deal drift.” I think the perfect saying to have as a reminder is “time is the enemy of all deals,” or as my wife is all too tired of hearing me say, “Don’t pop the champagne until the ink is dry on the contract and the money is in the bank.”.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Both Sides of the Table

APRIL 20, 2011

The Exchange Fund – This allows the entrepreneurs to diversify their founders stock into other portfolio companies stock. Twitter wanted to raise money for this new venture at a pre-money valuation which was quite a bit higher than First Round’s $10 million limit. A few deals have been funded through this program.

Pre-Money Valuation 284

Pre-Money Valuation Technical Review Cofounder Cram Down 284

Lightspeed Venture Partners

OCTOBER 7, 2012

This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Startup Professionals Musings

SEPTEMBER 30, 2011

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Startup Professionals Musings

JANUARY 27, 2012

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board.

Term Sheet 223

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

YoungUpstarts

SEPTEMBER 15, 2018

Startup valuation, under no circumstances, can be described as a simple affair. The pre-money valuation of other startups is based on the following factors. It is important for businesses to be duly evaluated because it’s the valuation of businesses that actually go on to draw investors.

Pre-Money Valuation 124

Pre-Money Valuation Valuation Sweat Equity Startup 124

ithacaVC

OCTOBER 16, 2012

Doug is an older guy with lots of startup experience both as entrepreneur and investor. Doug’s lecture was on startup company valuations. So, you want to raise $500,000, well guess what, your pre-money valuation will be between $930,000 and $2mm. Period, the end. Yeah, it is that simple.

Valuation 58

Valuation Pre-Money Valuation Startup Equity 58

Both Sides of the Table

JULY 27, 2014

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. Video 1 is here : Late stage valuations are in a mini bubble. This can’t all be driven by increased company performance).

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation.

Pre-Money Valuation 163

Pre-Money Valuation Post-Money Valuation Valuation Dilution 163

Austin Startup

JUNE 21, 2018

Our pre-money valuation for the seed round is 2 trillion dollars.” Now, if you’re a crypto entrepreneur, you still have to abide by the basic rules of good startups (link shamelessly inserted if you missed it before). Now go out and make Ronald Coase proud: start lowering those transaction costs crypto entrepreneurs!

Securities and Exchange Commission 61

Securities and Exchange Commission SEC Pre-Money Valuation Security 61

David Teten

SEPTEMBER 16, 2014

Angel investors are generally former entrepreneurs and/or executives, who invest in privately-held, early-stage companies. Villalobos & Payne: “Startup Pre-Money Valuation: The Keystone to Return on Investment” 117. Lastly, angels want to serve as mentors to the next generation of entrepreneurs.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114