Both Sides of the Table

MAY 28, 2018

It’s true that some later-stage private equity firms like to fund “roll ups” (a company that acquires many related companies in it sector), but this is seldom the domain of VCs. Every VC knows that the amount you raise is often a proxy for your valuation.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

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.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

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

Agile VC

APRIL 17, 2011

Obviously most of these employees are working hard primarily for equity upside compensation, but Kayak’s personnel costs are roughly $200K/head so the company is highly productive on a per employee basis. Pre-IPO Funding History: Kayak has raised approximately $235M in VC funding to date. Pre-money valuation was approx.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Hunter Walker

AUGUST 7, 2017

While you should expect these sorts of hires to take below market cash comp versus what Google is paying them, this tradeoff needs to be replaced with equity upside. No one wants to run out of equity pool midway between financings (and larger seed rounds these days usually means more hiring pre-A)!

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

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

Both Sides of the Table

OCTOBER 14, 2011

million pre-money valuation, which is a $10 million post-money) you get diluted by 25% (2.5m / 10m). And figuring out how much your equity may be worth over the course of a 5-year stint at a startup is even more complicated. If you raise a new round venture capital (say $2.5 million at a $7.5

Dilution 394

Dilution Pre-Money Valuation Startup Valuation 394

ReadWriteStart

OCTOBER 7, 2010

Bottom line, early stage equity is very, very expensive. 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. Sub-$2 million pre-money, it is better to bootstrap.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

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

SEPTEMBER 8, 2012

We plan to raise at a $5 million pre-money valuation. million pre-money. You can do it with equity & a price. We know how hard it is to get the first people committed. And we know it’s a challenge to herd cats. So we’ve reserved the first $150,000 at a $2.5

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

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

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

View from Seed

SEPTEMBER 14, 2021

Both early- and late-stage startup valuations are currently elevated. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ). Source: Cambridge Associates (VC) & TradingView (Equities).

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

Both early- and late-stage startup valuations are currently elevated. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ). Source: Cambridge Associates (VC) & TradingView (Equities).

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Both Sides of the Table

JUNE 22, 2011

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). And well they should be. And so on down then line. If a company that would traditionally raise $500k at a $3.5

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

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. The pricing problem – So an investor put $5 million at a $10 million pre-money valuation in a company with a great beta product but no real customers.

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

YoungUpstarts

SEPTEMBER 15, 2018

The pre-money valuation of other startups is based on the following factors. However, you may have more liquid assets because of which you think that your valuation should be more than what your investors have actually spelt out. Here are several factors that are taken into account while these startups are evaluated.

Pre-Money Valuation 124

Pre-Money Valuation Valuation Sweat Equity Startup 124

The Startup Lawyer

FEBRUARY 4, 2011

The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value. Pre-money valuations startups receive from incubators are typically low…really low. 2) Scrutinize the Investment Structure.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

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. It’s worth reading his post to understand the problem.

Pre-Money Valuation 150

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

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. Seat on the board. But the lead angel would certainly ask to be given a seat.

Term Sheet 158

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

Lightspeed Venture Partners

NOVEMBER 19, 2012

Interestingly, this new deal actually lowered the pre money valuation for the company. 75,000 for 10% implies a $675,000 pre money valuation. 150,00 for 20% implies a $600,000 pre money valuation. Kevin agreed to this, as did the founder, and a deal was struck.

Pre-Money Valuation 166

Pre-Money Valuation Alabama Valuation Churn Rate 166

View from Seed

SEPTEMBER 14, 2021

Both early- and late-stage startup valuations are currently elevated. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ). Source: Cambridge Associates (VC) & TradingView (Equities).

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

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

The Startup Lawyer

JANUARY 22, 2013

Depending on the delta between the price cap and the pre-money valuation of the qualified equity financing, the convertible note investors could receive a windfall in terms of liquidation preference. The Potential Problem Let’s say Series A investors invest at a pre-money valuation that [.].

Liquidation Preference 54

Liquidation Preference Pre-Money Valuation Valuation Equity 54

The Startup Magazine

SEPTEMBER 12, 2019

Before opening yourselves up to venture capital, you should have enough customers to demonstrate real value and present specific numbers to support your pre-money valuation. . It certainly was for us. The post Vulture Capital: Why Early Stage VC Could Kill Your Startup appeared first on The Startup Magazine.

Early Stage 85

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 85

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.).

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Early Growth Financial Services

OCTOBER 23, 2014

Median pre-money valuations have increased by 43% so far in 2014 compared to 2013. More … Continue reading → Equity / Debt / Venture Funding' The trend continued in 2014: with activity during the six months through June the strongest since the comparable period of 2001.

Pre-Money Valuation 59

Pre-Money Valuation Equity Valuation Startup 59

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. The company came back and offered him 20% of the company for the $200k (an $800k pre money valuation). They were seeking $200k for 10% of the company (a $1.8M

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

The Equity Kicker

APRIL 10, 2015

From the perspective of existing investors the right way to calculate the valuation multiple is to compare the pre-money valuation of the new round with the post-money valuation of the last round, which is the same as the increase in share price. (As

Valuation 60

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

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

ithacaVC

OCTOBER 16, 2012

Here was his key takeaway: the best way to look at valuations of seed or Series A companies is to consider the amount being raised and the fact that the investors will want to own between 20% – 35% of your company after they invest (assuming a priced equity round). Period, the end. Yeah, it is that simple.

Valuation 58

Valuation Pre-Money Valuation Startup Equity 58

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

This is going to be BIG.

JULY 30, 2015

If you could return investors nearly triple their money and mid 20's returns consistently, compared to the 8% long term return in the public equities market, they'd more than accept that. Comparatively, if you look at long term private equity results, I think most investors are winding up with high teens returns.

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60