Both Sides of the Table

SEPTEMBER 28, 2014

The more you burn the higher your investor’s leverage relative to you is if you start to run out of money and don’t have options. Valuation. I wanted to call out special attention to valuation in this debate. If you’re raised at $250 million+ valuation even more cautious.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Pascal's View

JULY 9, 2017

This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

The Equity Kicker

APRIL 10, 2015

A few of them have done good up rounds and the easiest way to describe the magnitude is to talk about the valuation multiple. As a refresher, the post-money valuation is calculated as the pre-money valuation plus the amount of money invested.). (As

Valuation 60

Valuation Pre-Money Valuation Post-Money Valuation Option Pool 60

ReadWriteStart

JULY 21, 2011

They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. All we had were six slides, and I wanted a $10 million post-money valuation. We had gone back and forth with them on valuation, but this was a new firm and they wanted to close a deal with us.

Post-Money Valuation 122

Post-Money Valuation Valuation IPO Venture Capital 122

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital. Only you know.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

YoungUpstarts

SEPTEMBER 20, 2019

As well as how to work with pre and post-money valuations. Generous is not a word often associated with talking about negotiations between startup entrepreneurs and their investors. It’s often more all about fearing how tough VCs are going to be with their term sheets and ‘standard’ clauses. Generosity is nowhere on their radar.

Technical Cofounder 118

Technical Cofounder Entrepreneur Cofounder Post-Money Valuation 118

View from Seed

MARCH 24, 2021

What Are Your Valuation Expectations? Taking Corporate Venture Money: When it Makes Sense “PayPal took on these investors in small part because it gave us an imprimatur in the stodgy and regulated world of financial services. “If you say something too high, it may scare some investors away prematurely. ” (Rob Go).

Seed Stage 177

Seed Stage Hiring IPO Analytics 177

Both Sides of the Table

SEPTEMBER 25, 2010

Taking it from an investor perspective (not me, angels) I think it’s totally unfair to see early angels invest, take more risk, help you get to the next level through both sweat & money, and then pay a higher price because the round had a convertible note with no cap. I agree on all points. I chuckled.

Finance 286

Finance Term Sheet Technical Review Warrant 286

The Next Web

DECEMBER 30, 2012

Raising money for a startup from an angel investor : Learn pre-money and post-money valuations are. A few selections: Hedge Funds, Venture Capital, and Private Equity : Similarities in compensation structure for hedge funds, venture capital firms, and private equity investors.

Artificial Inteligence 156

Artificial Inteligence Founder Private Equity Ruby 156

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).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Lightspeed Venture Partners

OCTOBER 7, 2012

That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors. As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. The last company was a bit of a puzzler.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Both Sides of the Table

JUNE 5, 2015

In the old days VCs funded off of a “pre-money” valuation. If you add the pre-money valuation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-money valuation. I can boil it down to how this tension plays out.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Lightspeed Venture Partners

SEPTEMBER 23, 2012

post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation. The company ended up negotiating with Cuban and settled on $300k for 30% of the company, or a $1M post money valuation.

Pre-Money Valuation 158

Pre-Money Valuation Post-Money Valuation Valuation Dilution 158

Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Both Sides of the Table

JULY 25, 2010

The key to this strategy is getting 5 people who form the social proof to help you get a bigger angel round done at a higher valuation by tons of industry insiders and thus offering the social proof you need attract great employees and ultimately venture capital investors.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Steve Blank

JULY 19, 2011

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital. They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. All we had were six slides, and I wanted a $10 million post-money valuation.

Post-Money Valuation 250

Post-Money Valuation Venture Capital Valuation IPO 250

Rob Go

MAY 20, 2014

As a result, questions around valuation are less about “what is the value of this company” and more “how much capital is a VC willing to part with to buy 20%?” Waiting 6 months longer to raise may improve valuation in the short term. Therefore, who invests is much more important than valuation.

Valuation 76

Valuation Dilution Post-Money Valuation Syndicate 76

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Gust

JUNE 21, 2014

Therefore, if the maximum market cap we can hope for from a company is $2 million at the end of the day, and our investment needs to return 30x, that means the post-money valuation after our investment needs to be $2m ÷ 30, or $66,666.

Angel Investor 127

Angel Investor Post-Money Valuation Valuation Time Value of Money 127

ithacaVC

JANUARY 24, 2013

One interesting point that comes up a lot is how to factor the convertible debt into the premoney valuation of the Series A round. I am going to ignore any valuation cap feature. Series A premoney valuation negotiated to be $3mm. Let’s assume the following: Common Stock outstanding: 3,400,000 shares owned by the founders.

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

Both Sides of the Table

SEPTEMBER 18, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

OCTOBER 17, 2011

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

betashop.com

OCTOBER 8, 2012

Never, ever, choose your investors based on valuation. Alignment of business objectives and personal relationships means tons more than valuation. Raise as little money as possible when you first start. 10M post-money valuation = $100M target. 500M valuation = $5B target.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. So they recapitalize the company. Sure – it happens.

Recapitalization 70

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

ithacaVC

JANUARY 14, 2014

I was giving some advice the other day on how to approach Series B investors in terms of valuation. Company X raised its Series A at a pre-money valuation of $5mm and it raised $4mm dollars. So the post-money valuation after the Series A was $9mm. What should the pre-money valuation be for the Series B?

Pre-Money Valuation 58

Pre-Money Valuation Post-Money Valuation Valuation Term Sheet 58

Berkonomics

MARCH 28, 2019

First: Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? No one wants to face this, but the need for money and the possible overpricing of the first rounds may have created an unsustainable valuation.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Growthink Blog

JANUARY 24, 2011

Let's say an investor buys 1,000,000 shares of stock in a company at $5/share and the company's total shares outstanding is 3,000,000 shares (implying a pre-money valuation of $10 million (2 million shares @ $5/share) and a post-money valuation of $15,000,000 (3 million shares @ $5/share)).

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

Lightspeed Venture Partners

SEPTEMBER 21, 2013

to fund the company at a $6M post money valuation from a number of investors including Selena Gomez. Despite having over 500k downloads and making $450k in revenue over the last 21 months, he had only $185k left in the bank, which meant that he would be out of business in 90 days if he didn’t raise more money.

Pre-Money Valuation 162

Pre-Money Valuation Valuation Dilution Distribution 162

Gust

SEPTEMBER 17, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

VC Adventure

NOVEMBER 14, 2012

As valuations have risen (become “frothy” in VC speak, which is our nice way of saying “too high”) companies have started raising much larger Series A rounds. You already know that I believe that you’re burning too much money. But that’s not what I want to talk about.

Balance Sheet 77

Balance Sheet Valuation Post-Money Valuation Early Stage 77

ithacaVC

APRIL 25, 2014

For example, cell E2 is the spot to put in the negotiated pre-money valuation. The green box at row 45 just provides a nice double check on post-money valuation calculations. It is a simple model and NOT perfect, but it will work very well in most situations for you. Here are things to note: 1.

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million. So what if they put their fund to work earlier than expected?

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

VC Cafe

NOVEMBER 1, 2019

Pitchbook shows that Notion has a post money valuation of $800M, making Notion a fast unicorn from the time of funding. The riynd was led by First Round Capital, joined by several other star investors including Josh Kopelman, Shana Fisher, Naval Ravikant, Aydin Senkut, Elad Gil and Mike Vernal. First Round was.

Wiki 68

Wiki San Francisco Post-Money Valuation Cloud 68

www.mint.com

MARCH 9, 2010

What is the post-money valuation of your last round? Post-money valuation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count).

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

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. OK, you would own 0.25% of the stock. They raised $5 million in their B round.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418