Pascal's View

JULY 9, 2017

This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

Both Sides of the Table

SEPTEMBER 28, 2014

Burn rate in case you don’t know is the amount of money a company is either spending (gross) or losing (net) per month. (it by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Both Sides of the Table

MAY 30, 2018

What was the post money on your last round (and how much capital have you raised)? It’s not uncommon for a VC to ask you how much capital you’ve raised and what the post-money valuation was on your last round. Every VC has a story where they did the flat round anyways and the founder said, “I really don’t mind!

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

ReadWriteStart

JULY 21, 2011

They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. All we had were six slides, and I wanted a $10 million post-money valuation. We had gone back and forth with them on valuation, but this was a new firm and they wanted to close a deal with us.

Post-Money Valuation 122

Post-Money Valuation Valuation IPO Venture Capital 122

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.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

SEPTEMBER 25, 2010

Paul Graham’s assertion that “any startup founder can tell you the most common question they hear from investors is not about the founders or the product, but “who else is investing?&# When I’m in, I’m in. rings true to me. Investors who commit early deserve to have a lower price.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

JUNE 5, 2015

In the old days VCs funded off of a “pre-money” valuation. If you add the pre-money valuation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-money valuation. Those are the big three. For me it’s clear.

Pre-Money Valuation 150

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

Both Sides of the Table

JUNE 5, 2011

I’ve decided to take all of my private conversations and subjective points-of-view on the topic and make them public in a keynote speech at the Founder Showcase in San Francisco on June 15th. I thought I’d post on one of the topics before hand. million post-money valuation with no revenue.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Lightspeed Venture Partners

OCTOBER 7, 2012

The founders were very sympathetic; a man, laid off from his job, and his very pregnant wife, who sold their house and investing $150k into the business and are working hard to make a go of it. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

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. Led by General Catalyst with participation by co-founders Steve Hafner & Paul English.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

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. Seat on the board.

Term Sheet 223

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

Feld Thoughts

FEBRUARY 9, 2016

I have two simple rules for founders in my head from this experience. This is a little tricky in early rounds and with modest up-round financings, as you’ll often have a liquidation preference that is high relative to your overall valuation. You might have it in the bank already.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

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. Seat on the board.

Term Sheet 227

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

Steve Blank

JULY 19, 2011

They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. All we had were six slides, and I wanted a $10 million post-money valuation. We had gone back and forth with them on valuation, but this was a new firm and they wanted to close a deal with us.

Post-Money Valuation 250

Post-Money Valuation Venture Capital Valuation IPO 250

Gust

OCTOBER 17, 2011

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. Seat on the board.

Term Sheet 158

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

Both Sides of the Table

MAY 13, 2013

I’m supposed to believe that my best innovation can only come from scores of startup founders who just made millions and have now become CVOs at my company? If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

FEBRUARY 15, 2016

And recaps hurt founders so often people just avoid doing them. The early stage investor probably still owns 15% of your company and thought he or she had a great return coming (after all – it got marked up to $100 million post-money valuation just 12 months ago!). Are Your Existing Investors Over Their Skis?

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

betashop.com

OCTOBER 8, 2012

When we pivoted from fabulis to Fab, we pivoted towards building a business around the unique tastemaker talents of one of our founders, Bradford Shellhammer. Have amazing co-founders who are better at what they do than you could ever be. Founders need to personally own something big themselves. 500M valuation = $5B target.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Both Sides of the Table

SEPTEMBER 18, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. Less than you’ll probably grant your most junior employees in stock options? Him: Not so good.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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. Sure – it happens.

Recapitalization 70

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

www.mint.com

MARCH 9, 2010

What is the post-money valuation of your last round? Post-money valuation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count). But you should beware of boards that are only the founders and their family and friends.

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

View from Seed

JANUARY 11, 2017

But mainly we did it because these corporate VCs were among the only groups willing to invest at PayPal’s somewhat inflated post-money valuation, during the middle of the dot-com crash when traditional VCs pulled back sharply and other sources of funding were constrained.

Strategic Investors 120

Strategic Investors Post-Money Valuation Seed Stage Cofounder 120

Berkonomics

MARCH 28, 2019

First: Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? These include “tag along rights” which allow investors to sell some shares when others, such as management or founders, sell any shares.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

This is going to be BIG.

MARCH 28, 2021

It’s the one time that, as an investor, I’m not aligned with the founder at all. I want to try to buy up shares of the company as cheaply as possible (and own more) and the founder wants to give up as little of the company as possible. Consider the first money you ever take from VCs. A lot is made out of the price of a round.

Founder 133

Founder Post-Money Valuation Dilution Valuation 133

Haystack

APRIL 10, 2018

About 150 people showed up, a healthy mix of founders, seed-stage investors and big fund VCs, and a bunch of LPs of various sizes. with a median post-money valuation of $10.7M — these are the highest Pitchbook has recorded. Some press showed up, too.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million. What $2.5mm seed round has lasted a company 24 months lately?

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

Lightspeed Venture Partners

SEPTEMBER 21, 2013

Josh Brooks, who ran marketing for MySpace for three years, is the founder of a company that lets users take photos form their phones, and then use those photos to send postcards in the real world to their friends and family. to fund the company at a $6M post money valuation from a number of investors including Selena Gomez.

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

Berkonomics

APRIL 6, 2012

Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? These include “tag along rights” which allow investors to sell some shares when others, such as management or founders, sell any shares.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

Both Sides of the Table

NOVEMBER 4, 2009

Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation. Best to be a founder. Anyway, I hope this post hasn’t been too harsh. I’m not all about the money.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Gust

SEPTEMBER 17, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. But in life investors are looking for somebody inside the tent to tell them what to do if you need more money.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Ben's Blog

JULY 16, 2013

In June of 2000, I raised money at an $820M post-money valuation. By the end of the year and despite more than doubling bookings, I could not raise money at any price in the private markets and was forced to take the company public at a $560M post-money valuation. Things change.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Board Effect

MAY 13, 2019

We’ve said it before : cap tables dictate who holds the money power in a startup just as org charts dictate the people power. Managing cap tables presents much less of a challenge to founders in their “garage days”; offering up their blood, sweat, and tears in sacrifice to the startup gods. Cap Table Management While Bootstrapping.

Cap Table 40

Cap Table Management Liquidity Event Dilution 40

Both Sides of the Table

AUGUST 1, 2010

From the debate on VentureHacks, our offline chats and from our blog posts, I think that Chris Dixon and I are pretty much 98% aligned on the topic. If we can’t agree on price I tell entrepreneurs that they can raise money and say “GRP will speak for half of the round.&# Done – the only signal is positive.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

thestartuplawyer.com

FEBRUARY 24, 2010

He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. You can start by examining every aspect of the co-founder relationship. In fact, if your co-founder is a friend or relative, that should trigger even more issues and discussions.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Feld Thoughts

JUNE 2, 2015

The entity getting screwed on this term are the founders, who now have a greater liquidation preference hanging over their heads than the dollars invested by the angels. If the entrepreneur knows this and is using it proactively so they get a higher post-money valuation, that’s fair game.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

betashop.com

OCTOBER 8, 2012

Position your desk in a way in which you are staring at your co-founders and they are staring at you. That means if you’re taking money with a $5M post-money valuation, the expectation is that you are building for a minimum $50M exit. $10M 10M post-money valuation = $100M target.

Post-Money Valuation 92

Post-Money Valuation Valuation Dilution Advisory Board 92

Lightspeed Venture Partners

OCTOBER 1, 2012

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. Many VCs won’t even consider an investment in a company where the founders are expressly looking to exit early. They want to see an opportunity for 10x or even 100x returns.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158