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

Steve Blank

JULY 19, 2011

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital. They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. Filed under: E.piphany , Venture Capital.

Post-Money Valuation 250

Post-Money Valuation Venture Capital Valuation IPO 250

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

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

Berkonomics

MARCH 28, 2019

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later you may need to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. What VC’s can and cannot do.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Feld Thoughts

FEBRUARY 9, 2016

I have two simple rules for founders in my head from this experience. First, make sure you know where the capital is going to come from to fully fund your business. Deal with reality as a founder as well as an investor group and avoid this complexity – just clean up your cap table instead.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Haystack

APRIL 10, 2018

Earlier today, the folks from Afore Capital hosted their inaugural “Pre-Seed Summit” in San Francisco. 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. Some press showed up, too.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

Berkonomics

APRIL 6, 2012

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later these businesses will have to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment.

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

VC Cafe

JUNE 10, 2022

For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. According to new research by Pitchbook , the trickle down effect has already started in seed and series A startups with round sizes and valuations shrinking in size compared to 2021.

Valuation 151

Valuation Marketing Venture Capital 151

The Next Web

DECEMBER 30, 2012

These are with no doubt worthwhile goals, but I’d like to pose an important challenge for founders: Make learning and development your key resolution in 2013. Learn how to raise capital from angel investors and venture capitalists (and how to decide who you should target).

Artificial Inteligence 156

Artificial Inteligence Founder Private Equity Ruby 156

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

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? 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. On the phone …. We raised a seed round. About $1 million.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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

Seeing Both Sides

JULY 15, 2009

A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). In other words, the existing management team/founders have given up 20% points of their ownership in order to go towards future hires. VCs have an unfair advantage when it comes to financings.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

Altgate

DECEMBER 18, 2008

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Holiday Cards Year End Management Changes → The 3X Liquidation Preference Is Back! But non-management employees and founders will be thrown table scraps and crushed down. What’s the alternative?

Liquidation Preference 31

Liquidation Preference Venture Capital Post-Money Valuation Participating Preferred 31

Professor VC

FEBRUARY 12, 2015

I was an informal advisor to the founders from the time they were the only two employees. In 2008, I made an investment offer of $250K for approximately 38% of the company ($400,000 pre-money valuation). The current valuation of $2B is 3,000X the proposed post-money valuation of that seed term sheet.

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

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

Board Effect

MAY 10, 2019

Cap tables are throughout these negotiations to model potential pre- and post-money valuations. In some situations, however, it may be more appropriate to use a group/party name (as in cases where multiple venture capital groups have invested in a company).

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

www.paulgraham.com

APRIL 28, 2010

2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get. Ifyou put $50,000 into a company at a pre-money valuation of $1million, then the post-money valuation is $1.05

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63