View from Seed

AUGUST 17, 2021

One industry specific example is the strange fascination among some LPs and GPs around term IRR. Even though everyone knows that VC funds take 10+ years to come to fruition, one often can’t help but benchmark themselves based on IRR in the early days. Also, being too dogmatic isn’t very fun J. We think about this a lot too.

IRR 136

IRR Dilution Founder Portfolio 136

Startup Professionals Musings

MARCH 12, 2023

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

JUNE 13, 2020

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

Version One Ventures

SEPTEMBER 22, 2021

3x the invested capital net of fees over a period of about ten years for a net IRR in the low twenties). The pandemic has reset these expectations over the past 18 months, leading to huge increases in valuations for both public and private tech companies. .

Venture Capital 201

Venture Capital IRR Private Equity Seed Stage 201

Both Sides of the Table

MAY 24, 2021

Case in point, Procore just went public and is trading at an $11 billion valuation. sold to Disney for $670 million and since our first investment was at < $10 million valuation we did quite well. Instagram selling to Facebook. This is true in consumer but it’s also true in enterprise software. Maker Studios?—?sold

Venture Capital 363

Venture Capital LP Valuation Later Stage 363

David Teten

JANUARY 19, 2021

Yes, via conversion rights at a valuation cap. Yes, via conversion rights at a valuation cap. This causes the cost of capital for Flexible VC, often calculated through IRR (similar to an interest rate), can be higher than that of venture debt or traditional RBI. 20-30% is a common target IRR for investors.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

David Teten

MAY 16, 2017

As an idea of how high the bar is for a GP, he says , “I dove into our fund log from the last couple of quarters and found that the mean IRR (among VCs listing one) was over 36%.” Chris Douvos is one of the very few LPs who blogs, at SuperLP.com. ” . See for example their interview with Brad Feld. .

Private Equity 60

Private Equity Venture Capital Technical Review Equity 60

Up and Running

DECEMBER 22, 2015

My personal favorite in the “pure nonsense category” is the IRR, the Internal Rate of Return , something that was interesting for about one hour as part of the MBA curriculum, but which has no relevance in the real world. Read more of my articles related to this topic: You Can Take That IRR and Shove It.

Angel Investor 60

Angel Investor IRR Software Review Startup 60

Steve Blank

MARCH 31, 2014

Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption. Look at the valuations of companies like Tesla, Illumina, and Twitter.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

Startup Professionals Musings

AUGUST 2, 2014

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

Angel Investor 266

Angel Investor Entrepreneur Venture Capital IRR 266

Startup Professionals Musings

FEBRUARY 5, 2018

These are companies that not only have a familiar brand, but carry from five to 35 billion dollar valuations. Investors measure their success by looking at the internal rate of return (IRR). Most of you probably recognize the brand names AirBnB, Instagram, and Slack, all of which are less than ten years old.

IRR 143

IRR Marketing Startup Angel Investor 143

David Teten

SEPTEMBER 16, 2014

Villalobos & Payne: “Startup Pre-Money Valuation: The Keystone to Return on Investment” 117. Despite the difficulties in gathering it, angel return data has gradually accumulated over time and the verdict is in: we’ve looked at a dozen different studies of angel returns , and they show returns ranging from 18% to 54%. .

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

Gust

APRIL 30, 2014

Having now invested in over 85 startups, and finding that my personal metrics are very similar to aggregated industry ones, it is clear that (a) there is little to no correlation between my home runs and my personal favorites, and (b) angel investing done correctly really *can* produce a consistent IRR in the 25%-30% range.

Angel Investor 148

Angel Investor IRR Due Diligence Aggregator 148

Hippoland

NOVEMBER 13, 2016

But as we’ve seen, these valuations can be hocus-pocus — even at later stage rounds, we’ve seen lots of companies of late fall from grace and become massively devalued overnight when they cannot raise their next round at a higher valuation. Shouldn’t they get a bump up in valuation? Intuitively, you might think, “Yes!

IRR 48

IRR Valuation Portfolio Due Diligence 48

Startup Professionals Musings

JUNE 5, 2016

VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity?

Angel Investor 120

Angel Investor IRR Valuation Startup 120

Startup Professionals Musings

APRIL 3, 2012

But I have found that making the right choice at the right time can have a major impact on your long-term valuation, and the decision process is complex. Angels typically have simpler term sheets, don’t squeeze so hard on valuations, and are more realistic on time-frames. The money is the same color in either case.

IRR 248

IRR Term Sheet Startup Valuation 248

Up and Running

AUGUST 19, 2014

I’m impressed when entrepreneurs know their numbers inside and out and are realistic about their valuations. Forget the stupid IRR (that’s internal rate of return) that they taught you in business school. . - Candice Yoneyama, Angel from Los Angeles, CA | Twitter | Linkedin. Tweet This Tip. “I’m

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

Seeing Both Sides

SEPTEMBER 26, 2010

Facebook, LinkedIn, Groupon, Zynga, Twitter and many others are able to raise capital at extraordinary valuations. To achieve that same 38% IRR in 9 years, a 20x return is required! If the founders take money off the table, they are incented to go for the bigger win and don’t mind taking the time to get there.

IRR 36

IRR IPO Entrepreneur LP 36

SoCal CTO

MAY 19, 2010

By way of background for the question, there’s a great post by Bob Aholt, a Pasadena Angel: An Angel Investor’s Thoughts on Valuation. The largest number of exit transactions today are in the under $30-million valuation range. For example, Frank had Basil Peters, author of Early Exits , on his show back in March.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

David Teten

NOVEMBER 17, 2011

Download the Startup Options Valuation model here. Enter Raul: This capital table startup options valuation model was created with the purpose of valuing options for an illiquid, early-stage start-up. The valuation method I discuss here is how people (other than friends, family and fools) really invest in early stage companies.

Employee 155

Employee IRR Startup Mexico 155

Up and Running

JUNE 17, 2013

I find myself mildly offended by the idea that I’m supposed to give real importance to numbers for five years in the future produced by unbelievably high sales projections coupled with unbelievably high profitability rates and linked with hypothetical valuations based on high multiples of sales or profits. I trust my judgment on that.

IRR 71

IRR Flash Angel Investor Venture Capital 71

This is going to be BIG.

JULY 30, 2015

I assumed the following: Seeds are done as a $1mm round on a pre-money valuation of $5mm. Series A's are done as a $5mm round on a pre-money valuation of $15mm. Series B's are done as a $10mm round on a pre-money valuation of $40mm. Series C's are done as a $25mm round on a pre-money valuation of $100mm. Exits are $250mm.

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

abovethecrowd.com

APRIL 20, 2016

One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. By January of 2016, that number had ballooned to 229.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Startup Professionals Musings

NOVEMBER 11, 2010

Angels typically have simpler term sheets, don’t squeeze so hard on valuations, and are more realistic on time-frames. Another rule of thumb is a target of 50% IRR (a discounted cashflow calculation). But beyond the numbers, there are many factual and subjective issues that you should be aware of before you step into the game.

IRR 225

IRR Startup Term Sheet Angel Investor 225

The Next Web

DECEMBER 16, 2012

That’s given us insight into which valuation methods are good, helping site owners clinch that all-important deal, and which fall short, leaving sites unsold and their owners disappointed. Today I want to walk you through the more successful valuation methods in use now. Common methodologies. The income approach. Asset approach.

Valuation 128

Valuation NPV Net Present Value IRR 128

Ben's Blog

AUGUST 17, 2020

When speaking with founders and private growth investors, we hear countless references to “multiples paid” on current or near-term revenue; both obsess over this because a higher multiple translates to a higher valuation. How valuation multiples work Why did multiples become a shortcut-heuristic for estimating valuations in the first place?

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

This is going to be BIG.

DECEMBER 28, 2013

My total valuation multiple across that span is nearly 4x and the return rate is up over 110% IRR. I''ve closed on about 20 early stage investments and, by comparison, 5 of my investments are now worth $40 million or more either via financing or exit (with three more over $25 million). That''s 25%.

Venture Capital 152

Venture Capital Cofounder IRR Dilution 152

Feld Thoughts

APRIL 21, 2016

As Bill points out, many funds are sitting on huge paper gains which translate into large TVPI, MOC, gross IRR, or whatever the current trendy way to measure things are. I didn’t buy any beer or spend all the money on random s**t I didn’t need and fundamentally couldn’t afford.

Marketing 70

Marketing Down Round Startup IRR 70

Agile VC

NOVEMBER 13, 2012

The IPO market remained closed to IT startups, but there were big acquisitions like Google buying YouTube for $1.65B (Fall 2006) and late stage financing rounds for companies like Facebook (Microsoft round at $15B valuation in Fall 2007). typically, which in most cases would to >20% IRR. So at a fund level (e.g.

LP 154

LP Portfolio Venture Capital IRR 154

Professor VC

JANUARY 17, 2008

If my math is correct, this is approximately a 31% IRR, which has to beat individual angel investments on aggregate and venture capital returns over the period of the study (1990-2007). Another comment which probably deserves more discussion is around valuation. return on investment after 3.5

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

K9 Ventures

MAY 14, 2011

The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000). As fiduciaries, the general partners of the uVC funds have to begin to focus on the dreaded VC I-word : IRR.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

K9 Ventures

NOVEMBER 30, 2008

For them to see a 5x return the company needs to exit at a valuation of $500M. For a 10x return that exit valuation needs to be $1B! For what I’ve seen/heard the tops VC funds typically have an IRR of over 20%. Let’s assume Shylock invests $20M over the life of the company and ends up with about 20% of the company.

IRR 48

IRR Venture Capital LP Early Stage 48

Feld Thoughts

AUGUST 1, 2018

We are very long-term investors, focusing on net cash on cash returns, rather than short-term or intermediate IRRs. We refer to B and C rounds as early growth – essentially financings with valuations between $50m and $300m pre-money. Our goal is to have significant ownership in companies we are investors in (often over 30%).

Syndicate 17

Syndicate Syndication IRR Canada 17