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When In Doubt on Pre-Money Valuation, Smart Guys Procrastinate

Recent Buzzes - VC Experts, Inc.

If there simply is no way to get a handle on the pre-money valuation in an angel round, the trick is to postpone the valuation/pricing decision until a future event. Typically this event is the first professional (some times called the Series A) round of financing, when the company is more mature.

Pre-Money Valuation vs Number of Founders | @altgate

Altgate

What is interesting is that you see a peak pre-money valuation of $3.16 Again, anecdotal though. So, I’m curious.

Hugh opportunities do NOT command amazing pre-money valuations.

Berkonomics

Dave’s note: Popular Bill Payne returns this week with a thoughtful take on valuations. Starting up Raising money By Bill Payne.

When In Doubt on Pre-Money Valuation, Smart Guys Procrastinate

Recent Buzzes - VC Experts, Inc.

This means the conversion price is 10% to 25% lower than the conversion price of the other players or at a negotiated pre-money valuation. Assume the pre for the bridge is somewhere between $1 and $4 million, this is too big a gap so the price is discounted 25% from the next rounds price. By Joseph W.

The Challenge Of Figuring Out Your Pre-Money Valuation

YoungUpstarts

As an entrepreneur, every time you seek money in exchange for ownership, you will face the challenge of setting a reasonable and defensible PMV.

Why Does Startup Pricing Vary by Location?

Gust

After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

Huge Opportunities Do NOT Command Huge Pre-money Valuations

Angel Investing News

Yet, at the pre-revenue stage of development, angel investors price both companies at a pre-money valuation of $1.5 But, it is…and here is why.  It is possible to grow a company to a valuation of $30 million on one or two angel rounds of investment.  million.  It doesn’t seem right, huh?

Why Does Startup Pricing Vary by Location?

Gust

After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

2012 Valuation Survey of Angel Groups

Gust

This summer I conducted our third annual survey of the pre-money valuation of pre-revenue companies recently funded by angel groups in North America.  Access to our 2010 and 2011 surveys can be found at 2011 Valuation Survey of North American Angel Investor Groups. Pre-revenue energy and clean tech. Overall.

Web-Based Worthworm Helps Determine PMV For Startup Investment Purposes

YoungUpstarts

” Ideaspotting investment pre-money valuation valuation Worthworm

Valuations 101: The Venture Capital Method

Gust

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. It is one of the useful methods for establishing the pre-money valuation of pre-revenue startup ventures. million. million.

Comparing valuations between rounds

The Equity Kicker

ACME Hot Food co first raises a round of £2m at £6m pre-money and hence £8m post-money. Venice Project

Why Raising Too Much Money Can Harm Your Startup

Both Sides of the Table

Amongst the most often asked questions I get from founders is, “How much money should I raise?” You have money, you spend it.

Valuations 101: Scorecard Valuation Methodology

Gust

These angel investors generally invest $25,000 to $100,000 in a round totaling $250,000 to $1,000,000.  In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Scorecard Valuation Methodology. As can be seen the average (mean) pre-money valuation for recent pre-revenue deals is $2.1

2011 Valuation Survey of North American Angel Groups

Gust

During the summer of 2010, I developed a workshop,  A New ACEF Valuation Workshop for Angels and Entrepreneurs.  To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies.  Valuation.

10 Rules of Thumb for Startup Investment Valuation

Gust

How much is NewCo worth to investors at this point (pre-money valuation)? Image via eHow.com. NewCo doesn’t have any of these yet.

A VC’s take on the Season 5 premier of Sharktank

Lightspeed Venture Partners

Brooks has previously raised $1.6M to fund the company at a $6M post money valuation from a number of investors including Selena Gomez.

How to Raise Investor Funding for Your Startup

Early Growth Financial Services

Pre-money valuation — The value of the company prior to investment, calculated on a fully-diluted basis. Nicolas L.

Understanding How Dilution Affects You at a Startup

Both Sides of the Table

” Everybody knows that when you raise money at a startup your ownership percentage of the company goes down. Dilution. million at a $7.5

Startup Fundraising Trends: Ask the VCs

Early Growth Financial Services

Median pre-money valuations have increased by 43% so far in 2014 compared to 2013. Not only was the conversation lively, there was even a bit of a West Coast versus East Coast smackdown. The funding landscape: 2013’s fourth quarter saw $13B invested in 1,000 deals. But the number of investments is 37% lower.

Sizing Option Pools In Connection With Financings

A VC : Venture Capital and Technology

Investors like to require that an unissued option pool is in the pre-money valuation calculation when they put money into early stage companies. Let's say you are raising $1mm at $4mm pre-money. And the investors want the option pool to be in the pre-money valuation. It is bullshit.

More on Liquidation Preferences

Altgate

But first, let’s look at pre-money valuation by liquidation preference. Explains why the pre is higher.

10 Rules of Thumb for Startup Investment Valuation

Startup Professionals Musings

How much is NewCo worth to investors at this point (pre-money valuation)? valuation entrepreneur startup investor business

The Silliness Of Recapping Seed Rounds

Feld Thoughts

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. ” They are running out of money. It blew my mind.

A Five-Minute Tutorial On How To Value Your Startup

Startup Professionals Musings

Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.” reveneue Shark Tank startup valuation

Kevin Learned’s Perspective on Valuation

Angel Investing News

Kevin recently wrote a series of articles on the valuation of early stage enterprises, which I believe to be noteworthy. Part IV –  New Data on Pre-Money Valuations. Angel Investors Fundable Deals Valuation angel investors angels early stage businesses pre-money valuation valuation

What is it Like to Negotiate a VC Round?

Both Sides of the Table

In the old days VCs funded off of a “pre-moneyvaluation. 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. It’s very simple. Size of my check.

10 Ways to Size Your Company’s Value for Funding

Startup Professionals Musings

How much is NewCo worth to investors at this point (pre-money valuation)? Assign real value to intellectual property.

What Costs Are Considered Reimbursable To The Founders Of A Startup Company?

Ask The VC

The issues of amounts far outweighs the structural issues, but the structural issues sometimes signal that there was an intent to see the money get paid back at the close of the financing. Other investors will view this as part of the investment required by the founders to justify the pre-money valuation.

Cost 79

Price Cap Liquidation Preference Windfall Regulators

The Startup Lawyer

Depending on the delta between the price cap and the pre-money valuation of the qualified equity financing, the convertible note investors could receive a windfall in terms of liquidation preference. The Potential Problem Let’s say Series A investors invest at a pre-money valuation that [.].

When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

Or, in the case of a convertible note, they’ll explicitly state a valuation cap. Lower-Than-Market Value. Market Value. ”).

Mathematical vs. Economic Dilution of Startup Equity: Thinner Slices of an Extra-Large Pizza

Gust

Suppose it raises $2 million at a $6 million pre-money valuation.  Expert commentators including David S. Industry Experts

How Investors Think About Valuation of Pre-Revenue Startups

SoCal CTO

They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. Bill Payne is an expert on how early-stage investors should look at valuation. is a requirement.

Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

This starts with understanding how VCs and entrepreneurs often see valuation differently. Thus the “true&# pre-money is only $2.4

Should Investors in the Same Round of Financing Ever Get Different Prices?

Both Sides of the Table

We plan to raise at a $5 million pre-money valuation. million pre-money. And a few others. So you need an anchor.

How to Evaluate an Offer from a Startup Incubator

The Startup Lawyer

The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value. Pre-money valuations startups receive from incubators are typically low…really low. Great news — your startup just got accepted to an incubator! Conclusion.

Quick Post on Post-Money Valuations

Rob Go

When I first started out as a VC nearly 9 years ago, most early stage company valuations were expressed as pre-money valuations.

Startups Should Revolve Around Their Founders if They Want to Succeed Big

Andrew Payne

From a statistical analysis of over 6,000 startups, the paper (and article) argue (roughly) that founders with board control, the CEO position, or both, can “harm the firm’s prospects, reducing pre-money valuation by up to 22%.” ” Really? These five alone companies represent $1.5 in technology) .

Valuation Methods 101

Gust

This is the first of a six part series on different methods used by angel investors to arrive at pre-money startup valuations.  Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in the case of one investment round, no subsequent investment and therefore no dilution).

What to Expect When You're Expecting Venture Capital Returns

This is going to be BIG.

You're putting money in over the first 3-4 years, but you're not really seeing most of it back until years 7, 8, and 9, if not longer.