Both Sides of the Table

SEPTEMBER 10, 2021

And the loosening of federal monetary policies, particularly in the US, has pushed more dollars into the venture ecosystems at every stage of financing. What Has Changed in Financing? On the one hand, you’re over paying for every investment and valuations aren’t rational. even before the pandemic itself has been fully tamed.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

JUNE 22, 2011

In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. million pre-money valuation is now raising $1 million at a $12 million valuation the next investor has nowhere to go but up (or sit out the investment).

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Both Sides of the Table

FEBRUARY 12, 2019

why the hell has seed financing declined so much in the past 3 years?? Over the past month a colleague ( Chang Xu ) and I sifted through data on the venture capital industry (as we do every year) and made a bunch of calls to VCs and LPs to confirm our hypotheses. thus the rise of “pre seed” investing).

Venture Capital 328

Venture Capital Technical Review Seed Stage IPO 328

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. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

SEPTEMBER 22, 2012

After all, growth equals high valuations and loads of venture capital! Instant growth = huge valuation from follow-on investors = big VC mark-up on our quarterly reports = LP interest. Startups will continue to be aggressive in spamming us in our Facebook timeline. And headlines. And approbation. Grow or die.

Silicon Valley 390

Silicon Valley Venture Capital Startup Technical Review 390

Both Sides of the Table

APRIL 18, 2019

The valuations were too high! This is only true when: 1) there is funding available to finance short-term losses and 2) when there is a lucrative positive unit-economics business when you become the winner. Act III was the “I told you so” comeuppance of anybody who we sure that the electric scooter market would fail.

South America 250

South America Global New York City Software Review 250

Both Sides of the Table

AUGUST 12, 2010

In the technology world there are a few websites that most startups track to keep up with the latest financings, acquisitions, product announcements and gossip: BusinessInsider, TechCrunch, Mashable, GigaOm, etc. Specifically we talked about Slide having gotten a $550 million valuation before being sold to Google for $182 million.

Seed Stage 232

Seed Stage Valuation Private Equity Venture Capital 232

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Both Sides of the Table

AUGUST 24, 2015

So why invest in that period of uncertainty unless it’s early-stage and thus valuation matters less. You might also favor a quicker close at a slightly lower valuation than you had hoped in order to decrease risk. You might also favor a quicker close at a slightly lower valuation than you had hoped in order to decrease risk.

Stock 150

Stock Finance Marketing Valuation 150

Both Sides of the Table

SEPTEMBER 29, 2009

They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Should VC’s really be impacted by public market valuations when the money that they’re investing today should be for returns in 7-10 years? Short answer – yes.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

APRIL 26, 2016

The key to being able to run a business that isn’t yet profitable (on operating margin) is availability of capital to finance losses and preferably at a cost that isn’t too punitive to the founders and employees. Sustaining short-term losses is all predicated on ability to finance the losses through venture capital or other means.

Metrics 150

Metrics Cost Acquisition Startup 150

Both Sides of the Table

MAY 4, 2013

As an early-stage investor that is not always aligned with my goal, which I would express as, “pay the right price for the stage & risk in a way that is fair to the founders yet preserves our ability to grow into our valuation at the next financing event.” I normally advise “ Raising at the Top End of Normal.”

Deal Flow 347

Deal Flow Early Stage Investment Bankers Technical Review 347

Both Sides of the Table

AUGUST 14, 2017

ICOs certainly have a place in startup financing. Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. The administrative work we actually do at board meetings?

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically. Thus begins the dance.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

MARCH 3, 2012

But it was early 2009 and not many companies were getting new financings at all so I thought they should take the deal. The truth is that I wasn’t as valuation sensitive as my original VC partner was and I would have been willing to raise price. The company agreed on a price but felt it was a bit lower than they had hoped for.

Term Sheet 356

Term Sheet Silicon Valley Reputation Partner 356

Both Sides of the Table

AUGUST 14, 2009

I recently wrote a post on angel financing covering the topic of convertible notes but I realized I was thinking about the issue more from investor perspective and a very narrow topic of how to price the round. So if you’re casually reading and don’t really care about angel financing – abort now! At what value?

Silicon Valley 291

Silicon Valley Ireland Technical Review Valuation 291

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Him: $12 pre.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

SEPTEMBER 23, 2010

Asked to respond to the topic, “What collusion happens with AngelList, if any&# I wrote the following: “Um, let’s not be naive here and not think that a “form of collusion&# doesn’t happen on virtually any financing round. How well financed is the competition? At what valuation? Cap or warrants?

Entrepreneur 292

Entrepreneur Technical Review Stealth Valuation 292

Both Sides of the Table

MAY 4, 2013

As an early-stage investor that is not always aligned with my goal, which I would express as, “pay the right price for the stage & risk in a way that is fair to the founders yet preserves our ability to grow into our valuation at the next financing event.” To all my banking friends … I’m not a hater.

Early Stage 361

Early Stage Deal Flow Investment Bankers Technical Review 361

Both Sides of the Table

MARCH 21, 2013

It also is a great way to finance your business without facing dilution before you actually raise venture capital and when the valuation you might get from angels is less than you’d want. So it wouldn’t bother me if 90% of your year-one revenue was PS provided it was done with a specific plan for year-2 software sales.

Software Review 321

Software Review Software IP Technical Review 321

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

Both Sides of the Table

NOVEMBER 14, 2017

This financial leader could well have come through the finance org at another startup or at a larger company but they often also can come from strategy consulting (Bain, BCG or McKinsey) or through investment banking (Goldman Sachs, Morgan Stanley, etc.).

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

FEBRUARY 4, 2016

.” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Both Sides of the Table

JANUARY 22, 2014

I’ve watched VCs help with valuation support (spreadsheets, comps) on next round financing, participate in M&A meetings, interview senior job candidates – even help terminate tricky senior hires. There are times you just need help getting s**t done.

Portfolio 364

Portfolio Chicago Sales Incubator 364

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. In the old days VCs funded off of a “pre-money” valuation. It’s very simple.

Pre-Money Valuation 150

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

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. Did raising money at a $500 million valuation help secure the $1 billion deal? “Impending” valuation.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Both Sides of the Table

JUNE 19, 2017

If you assume 4–6 months to raise your next round then with a year of runway you really only have 6–8 months to show progress on your previous round of financing, which is why I prefer an 18-month runway. If you burn $200k / month you’ll be out of cash in a year. years of cash runway, which is too much for a startup. million for 18 months.

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

Both Sides of the Table

FEBRUARY 6, 2017

And it’s not just that VCs cut their investment pace but they also indicated overwhelmingly that valuations of investments had dropped with 76% of all VCs surveyed suggesting 2016 had lower valuations than 2015. So if funding from VCs slowed, valuations dropped and burn rates were slashed, WTF happened to winter again?

Venture Capital 150

Venture Capital Saudi Arabia Kuwait Burn Rate 150

Both Sides of the Table

MAY 14, 2015

THIS is how absurd things have gotten: “I have to raise at a billion-dollar valuation” “Why? You don’t have the revenue or profit to support that valuation.” Entrepreneurs literally started asking for billion-dollar valuations just because the market is talking about unicorns. No, I take that back.

Valuation 150

Valuation Silicon Valley Non-Compete Software 150

Both Sides of the Table

AUGUST 30, 2010

a priced/valued preferred stock financing)?&#. If you’re the “first money in&# usually there is still product risk, market risk, financing risk and execution risk. Your goal as an early stage investor is specifically to lock in the most fair early-stage valuation you can. Here is my answer with some minor editing: _.

Equity 319

Equity Early Stage Angel Investor Valuation 319

Both Sides of the Table

FEBRUARY 22, 2019

Most votes are for administrative tasks such as stock options, 409a valuations, meeting minute approvals, compensation increases, etc. To be clear about one thing?—?almost almost nothing controversial is EVER voted on at a startup board meeting.

Strategic Investors 255

Strategic Investors Startup Stock Options Venture Capital 255

Both Sides of the Table

MARCH 2, 2011

And look at the valuation creep across the board in the past year. I like customer service but I also need to do sales, marketing, finance & operations. Whatever the situation is – it’s now clear that even if they WANTED to collude they couldn’t. They don’t have market power.

Email 287

Email Bankruptcy Equity Technical Review 287

Both Sides of the Table

SEPTEMBER 6, 2010

We set our sites on our IPO price and then worked back to our current valuation and showed potential employees what we thought they could earn (with all legal caveats) if the company was successful. There’s a difference between companies wanting to hide valuations and investors doing so. rounds and still be competitive.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

Both Sides of the Table

SEPTEMBER 1, 2016

Scott Kupor of A16Z responded with a comprehensive overview of valuation methodology in a post that while accurate feels more targeted at sophisticated Limited Partners (LPs) who invest in funds. Because VCs tend to “mark to market” for private investments so you would often value a company based on the last financing.

LP 264

LP Jordan Cofounder Limited Partner 264

Both Sides of the Table

APRIL 25, 2011

It’s nearly impossible to get a services company financed by VCs. They have created two internal technology “products&# and wanted to figure out how they could turn their services business into a product business that could be financed. You’re a small fish. This team is talented. They wanted advice.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Both Sides of the Table

JUNE 1, 2011

If you take a snapshot during an extraordinary surge in valuations, M&A activity, IPOs and thus wealth creation you’d echo John Doerr’s famous quote from 1999 that, “The Internet is the greatest legal creation of wealth in history.&# I still have to get sales, operations, finance, HR & corp dev right to win.

IPO 391

IPO Finance Valuation Naming 391

Both Sides of the Table

MAY 30, 2015

You raise a series of notes over 18 months and eventually are fortunate enough to raise $5 million at a $25 million valuation (this investor owns 16.67% and will likely have a 1x liquidation preference). On VC financings this term is explicit so entrepreneurs understand they’re getting screwed.

Liquidation Preference 150

Liquidation Preference Ratchet Angel Investor Entrepreneur 150