K9 Ventures

JUNE 5, 2015

Low supply of companies with traction drove the valuations and deal sizes up. So I mostly kept my opinion within a small closed group and let my LPs know that K9’s strategy was to *not* change our strategy despite the pressures of the market. Valuations are rising to match. Seed stage was super tough. The Epilogue.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Both Sides of the Table

APRIL 14, 2010

That means that the likely have a minimum of $15 million in liquidation preferences. It will usually be higher because the liquidation preference has a dividend so if the deal is long in the tooth assume that the liquidation preference might be $20-22 million. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Revenue multiple? People seem concerned about valuation.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

The Equity Kicker

JUNE 28, 2013

Otherwise the investors won’t make the multiple on their investment that they want and after liquidation preferences are paid the amount left for the entrepreneur may well also be disappointing. Company exits for £20m having raised £15m for 50% of the company in a 1x liquidation preference – the investor gets £17.5m

Liquidation Preference 116

Liquidation Preference Valuation Portfolio Operations 116

Both Sides of the Table

SEPTEMBER 28, 2013

A $1 trillion global market. The don’t understand VC liquidation preferences or multiple return expectations. The business concept was strong, we just needed to tweak it to adjust for market changes and we needed patience and resilience. Sure, our revenue is growing, but is that enough to raise an internal round?

Startup 417

Startup Dilution San Diego Stock Options 417

Up and Running

DECEMBER 30, 2015

Setting too high a valuation. Setting too high a valuation during a funding round can set you up for failure, setting expectations too high for ensuing rounds. It might be difficult to exceed your valuation, making investor relations difficult. – Phil Chen, Systems Watch. Overestimating future revenue.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

Up and Running

MAY 21, 2015

All the other sharks typically make a traditional equity investment; for example they’ll invest $100,000 at a $1,000,000 business valuation, and take 10 percent of the business. What this means, is that he gets paid not as a portion of the profit, but as a portion of the overall revenue, regardless of the profit.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Both Sides of the Table

NOVEMBER 4, 2009

If you’re thinking about joining as the director of marketing, product management manager, senior architect, international business development lead, etc. 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.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

ithacaVC

SEPTEMBER 20, 2011

In “VC world” Rule 409A is best known for providing a safe harbor for private company valuations, and in particular the setting of strike prices for employee stock options. If the company conducts an outside independent valuation, then, under 409A, the burden is on the IRS to prove that the valuation was not reasonable (i.e.,

Liquidation Preference 49

Liquidation Preference Common Stock Stock Options Valuation 49

abovethecrowd.com

FEBRUARY 24, 2015

Over the last few years, the late-stage (pre-IPO) market has become the most competitive, the most crowded, and the frothiest of these financing stages. An unprecedented 80 private companies have raised financings at valuations over $1B in the last few years. You must subtract it from your top-line revenue.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

dondodge.typepad.com

JANUARY 15, 2011

The entrepreneur expects the company to be worth many times this valuation and so does the investor. The key is to have several VCs or investors competing for the deal to arrive at a "fair" valuation. So they will give you a pre-money valuation somewhere around the amount you raise. That is how much you should raise.

Equity 40

Equity Employee Dilution Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

I recently survey more than 150 VC friends from all stages and geographies what they thought about the market by asking “Which of the following statements best describes your mood heading into 2016?” ” “Mark has a vested interest in talking down valuations of startups.” What is the True Sentiment of VCs?

Valuation 150

Valuation Down Round Startup Later Stage 150