Both Sides of the Table

SEPTEMBER 29, 2009

If they wanted to fund a company but other investors didn’t then they got involved in protracted negotiations over issues such as “pay-to-play” provisions. The pricing problem – So an investor put $5 million at a $10 million pre-money valuation in a company with a great beta product but no real customers.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Tim Keane

JANUARY 12, 2010

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. An average of these ranges results in a pre-money valuation of about $4MM.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ithacaVC

DECEMBER 14, 2011

With respect to the Series C round, let’s assume that the pre-money valuation is $12 million and that the VC investing is going to put in $4mm (and to keep things simple, let’s have only 1 Series C investor). Therefore, the new Series C investor would own 25% of the company post money ($4mm/($12mm + $4mm)).

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Feld Thoughts

JULY 14, 2015

The term sheet converts all the convertible debt into a post-money valuation of $100, essentially making the convertible debt worthless. The new money comes in at a pre-money valuation of $100, but includes a complete refresh of founder equity to 40% of the company. So they recapitalize the company.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70