Agile VC

APRIL 17, 2011

Kayak was started here in my backyard of Boston… co-founder & CTO Paul English and the product/engineering team is based here in Concord MA. Co-founder & CEO Steve Hafner and the business team are based in Norwalk, CT. Pre-IPO Funding History: Kayak has raised approximately $235M in VC funding to date.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Hunter Walker

AUGUST 7, 2017

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

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Convertible notes. Example of a cap table.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. Suppose it raises $2 million at a $6 million pre-money valuation. Expert commentators including David S.

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Berkonomics

JANUARY 7, 2021

How many of them, particularly in technology, were able to start a company, supply all the funding, and share no management tasks or equity with others, and still grow the company to any significant size, worthy of a multi-million-dollar opportunity to cash out at exit? Dividing equity among those that fill the management gap.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. I said that at the Founder Showcase, too. But this mania to not miss out on the next big thing is driving some investors to pay growth-equity prices for traditional market risk (as in, they’re paying up before it is clear there is product / market fit).

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

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. Define equity type.

Term Sheet 223

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

David Cohen

AUGUST 1, 2018

The reason the entrepreneur want a high cap is to signal a high price for the next equity financing of a larger amount of money. If they accept convertible notes now at a low cap, how could they possibly justify a higher equity price in a few short months when this larger financing is bound to happen? What a deal!

Pre-Money Valuation 83

Pre-Money Valuation Valuation Equity Finance 83

Both Sides of the Table

SEPTEMBER 29, 2009

This came in part due to the huge influx of money into VC but also because hedge funds and private equity shops with no VC experience wanted part of the action. No doubt they spent countless hours arguing for reduced burn rates sometimes with founders, sometimes with investors.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

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. Define equity type.

Term Sheet 227

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

Scott Edward Walker

APRIL 22, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? and (ii) what happens if the maturity date is reached prior to the note’s conversion to equity? Note: This post was originally published on TechCrunch.] What Is a Conversion Discount?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

Both Sides of the Table

JUNE 5, 2015

” Today I want to talk about how a VC thinks about equity pricing on your round and particularly if you’re coming off of a convertible note. In the old days VCs funded off of a “pre-money” valuation. the old days of $5 million on $20 million pre). Those are the big three.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Lightspeed Venture Partners

NOVEMBER 19, 2012

The two founders are attorneys in Mobile, Alabama, who found themselves wearing the same ties over and over again, and wanted to find a way to expand their wardrobe. The founders did not have many good answers about how they would grow the subscriber base. The two founders sought $105,000 for 25% of their company.

Pre-Money Valuation 161

Pre-Money Valuation Alabama Valuation Churn Rate 161

The Startup Magazine

SEPTEMBER 12, 2019

Tempted by large sums of money and the perceived validation that comes along with being funded, founders turn to venture capitalists to accelerate their company’s growth. Founders don’t have that luxury — for founders like me, the consequences of failure are more dire. It certainly was for us.

Early Stage 85

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 85

Gust

OCTOBER 17, 2011

The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Define equity type. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

The Startup Lawyer

FEBRUARY 4, 2011

But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

K9 Ventures

MARCH 23, 2011

I may be well be in the minority in the Valley to think this way — especially so as a seed stage investor — but I have a strong preference for doing priced equity rounds for funding companies at any stage. Since the financing would likely happen in short order, there was no need to have a valuation cap in the note.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Lightspeed Venture Partners

OCTOBER 22, 2012

The founders have more demand than they know what to do with, and want to raise $55k for 5% equity in the company to buy a second truck. This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). Freaker USA.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Lightspeed Venture Partners

OCTOBER 1, 2012

pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. Since an early exit caps the upside potential, getting in at the right, low valuation is necessary to be able to make a high multiple on your investment. That’s crap.

Pre-Money Valuation 153

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 153

ithacaVC

DECEMBER 13, 2013

There are many reasons for this, but fundamentally, it is impossible to calculate a share price for the investment round unless you have complete agreement on how many shares are outstanding pre-money. The share price is calculated by taking the pre-money valuation and dividing it by the number of shares outstanding pre-money.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. ” They are running out of money.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

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. The third group is made of the total number and types of investors, other than the founder(s).

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Tim Keane

JANUARY 12, 2010

The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay.   You can vary both valuation and term-sheet assumptions (in the gray boxes) to assess the impact on the values of the business.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

The Startup Lawyer

JUNE 22, 2010

The main feature of the convertible note is that the debt investment made by the angel investor will typically later convert into equity. For this article, let’s assume this equity is the Series A Preferred Stock purchased by a venture capital fund. Convertible Note Discount. As a sweetener to the angel investor (i.e.,

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

Altgate

MAY 24, 2012

Mark Zuckerberg and his executive team have been extremely successful at retaining equity in their company. But how well do most other founders do? Even as Facebook prepares to go public, Mark Zuckerberg, the founder and CEO, still owns 28% of his company. million, with a valuation of $10 million. How did they do this?

Pre-Money Valuation 43

Pre-Money Valuation Cofounder Dilution Valuation 43

Gust

NOVEMBER 4, 2011

In brief, a cap acts to place a limit on the conversion price of a convertible note such that investors are guaranteed a minimum number of shares for their bridge loans if the startup does a priced equity round at a high pre-money valuation – “high” meaning above the cap, which is often a heavily negotiated term. (The

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

Both Sides of the Table

SEPTEMBER 5, 2012

This time by the efforts of Adeo Ressi to introduce a new kind of structure called “ convertible equity.” 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.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

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. for a total of $10.5M

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

The Startup Lawyer

JANUARY 10, 2012

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. founders, option holders, etc.). A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e.,

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

Gust

OCTOBER 20, 2011

Individual accredited investors in typical angel deals put personal capital at risk for an equity share of growth-oriented, start-up companies. In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 As can be seen the average (mean) pre-money valuation for recent pre-revenue deals is $2.1

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

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 give up? How much equity should I grant to early employees? How much money should I take?

Equity 40

Equity Employee Dilution Valuation 40

ithacaVC

JUNE 3, 2015

The punishment comes in the form of “unjust” liquidation preference that the note holders end up with when they convert at a valuation cap that is way lower than the valuation of the actual round. If it is not subtracted then the new equity purchasers are not getting what they bargained for.

Liquidation Preference 40

Liquidation Preference Pre-Money Valuation Dilution Valuation 40

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. If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40