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How Investors Can Bring More Than Just Money To The Table

YoungUpstarts

Investing in startups is a lot more than just buying “stock” in a company. For startup founders and CEO’s it’s also just as common to see them place too much focus on the amount of money raised, and the pre-money valuation, rather than the value that each investor can bring to the table.

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Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

An average of these ranges results in a pre-money valuation of about $4MM.   If similarly situated companies are seeing $3.5MM pre-money valuations, this might become the target valuation.   Say I invest $1MM in a company and receive 40% of the stock. stake in the company.

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When to Bring Up Valuation

ithacaVC

If you want to scare off VCs, start your pitch with “we are looking to raise $X at a pre-money valuation of $Y” Stating how much you want to raise is fine and recommended. However, stating a desired pre-money valuation early in the process is not a good idea. Here is why.

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Time is the Enemy of All Deals

Both Sides of the Table

million at a $15 million pre-money valuation. We had people hearing through the grapevine that we were about to raise money and new investors started calling us to get in on the deal. If it’s a biz deal you might care about IP protection, revenue share, investment commitments to joint marketing – whatever.

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How to Start a Startup

www.paulgraham.com

The way to getrich from a startup is to maximize the companys chances of succeeding,not to maximize the amount of stock you retain. The problem is, for the company to exist, you have todecide who the founders are, and how much stock they each have. Before you consummate a startup, ask everyone about their previous IP history.

Startup 105
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Channel your Inner VC to Understand Startup Valuations

www.currentlyobsessed.com

Instead of “We are worth about $5m because we have done XYZ and we need to raise $1m, so let’s sell 20%&# it’s better to think about valuation as an output variable, like “Let’s raise $2mm and sell 33%, our (pre-money) valuation is therefore $4mm.&# Future value is key.