Both Sides of the Table

JULY 22, 2010

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. I turned them down. No gotchas.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Agile VC

APRIL 17, 2011

liquidation preference, 6% accumulated dividend (1). Post-money valuation probably no higher than $12M (2). Series A-1 Preferred. liquidation preference, 6% accumulated dividend. Pre-money valuation was initially set higher but was adjusted to match the Ser B valuation. as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

K9 Ventures

JUNE 5, 2015

Low supply of companies with traction drove the valuations and deal sizes up. Valuations are rising to match. A typical seed round valuation may be $6M pre, raising $2M for an $8M post, or even as high as an $8M pre, raising $2M for a $10M post. The risk here is what I refer to as the curse of over-capitalization.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

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. BTW, this ignores liquidation preferences which actually mean you’ll earn less. OK, you would own 0.25% of the stock. you won the lottery).

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

genylabs.typepad.com

SEPTEMBER 24, 2011

I wont bother going into details on start-up financing terms ( see this post for an overview of typical VC terms) except to say if you dont know and understand: the firms cap table and valuation. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have.

Equity 40

Equity Technical Review San Jose Stock 40

K9 Ventures

OCTOBER 19, 2015

Pattern matching in venture capital may work for figuring out how to build companies, but it is less likely to work for ideas. As I’ve pointed out in previous blog posts , one of the reasons the late stage investors are comfortable with investing at lofty valuation is because all their investments come with liquidation preferences.

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

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