Both Sides of the Table

JULY 22, 2010

Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. I just want to figure out what a fair valuation is.&# I figured all the VC’s talked so we should. This starts with understanding how VCs and entrepreneurs often see valuation differently.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Agile VC

APRIL 17, 2011

Post-money valuation probably no higher than $12M (2). Pre-money valuation was initially set higher but was adjusted to match the Ser B valuation. Pre-money valuation was approx. Pre-money valuation was approx. Pre-money valuation was at least $250M (2). Series A-1 Preferred. Series B Preferred.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

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. When we next spoke he had found out that the CEO had about 5% and there was no management option pool in place. He hadn’t thought to ask.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

www.payne.org

SEPTEMBER 22, 2011

The strike price typically goes up as the company raises additional funding (at higher valuations). My advice: understand the terms of your option grant, especially the strike price. Lets say youre being offered 2% of a company with a valuation of $10m after funding. Buying your stock would cost $200,000!

Equity 56

Equity Employee Vesting Preferred Stock 56

thinkspace.com

SEPTEMBER 7, 2012

Chris Dixon wrote a blog post about “ The one number you should know about your equity grant “ The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters). Percent of the outstanding option pool: meaningless.

Equity 62

Equity Employee Founder CTO Hire 62

www.paulgraham.com

OCTOBER 23, 2010

And those who do raiseVC rounds will be able to get higher valuations when they do. Ifthe best startups get 10x higher valuations when they raise seriesA rounds, that would cut VCs returns from winners at least tenfold. [ ButVCs never offered that option. 6 ] Some super-angels seem to care about valuations.

Valuation 92

Valuation Stock Partner Founder 92