Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. It had done about $30,000 in sales in a little over a year, and had emerged from a natural trade show with interest but no orders. Unsurprisingly, all the sharks passed, based on market size and valuation expectations.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

Startup Professionals Musings

NOVEMBER 26, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Lightspeed Venture Partners

SEPTEMBER 21, 2013

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 and planned to use the money to market the app. pre money valuation).

Pre-Money Valuation 161

Pre-Money Valuation Valuation Dilution Distribution 161

Lightspeed Venture Partners

OCTOBER 7, 2012

The company has done $400k in sales in less than two years and had an early test deal with a local supermarket chain that they were massively overperforming on. He had been at it for 6 months and had no sales or distribution lined up yet. The entrepreneur launched Zomm in late 2010 and did $700k in sales that year.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Startup Professionals Musings

SEPTEMBER 30, 2011

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Austin Startup

JUNE 21, 2018

It will revolutionize produce sales globally. Our pre-money valuation for the seed round is 2 trillion dollars.” We see a lot of crypto start-up ideas that go something like this: “We’d like to put bananas on the block chain and trade them with utility tokens. I’ve taken some editorial license here, but you get the idea.

Securities and Exchange Commission 61

Securities and Exchange Commission SEC Pre-Money Valuation Security 61

Both Sides of the Table

JUNE 22, 2011

In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. million pre-money valuation is now raising $1 million at a $12 million valuation the next investor has nowhere to go but up (or sit out the investment).

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Berkonomics

JANUARY 7, 2021

Second rounds, if needed, often drive the founder(s) into a minority position, unless the company has grown significantly by that time and can command a higher pre-money valuation, giving less stock for the same amount of investment. Reward for early risk.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

Gust

NOVEMBER 18, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Berkonomics

JANUARY 28, 2021

I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up pre-money valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road. Here’s the “what.”. And here’s the “why.”.

Early Stage 62

Early Stage Valuation Pre-Money Valuation Cofounder 62

Startup Professionals Musings

SEPTEMBER 6, 2010

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

SoCal CTO

FEBRUARY 2, 2011

Bill Payne is an expert on how early-stage investors should look at valuation. He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. Especially interesting is the Valuation Worksheet towards the end. If you've not had a C-level but have had experience in sales or tech.

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

Lightspeed Venture Partners

NOVEMBER 19, 2012

They talked about a referral program, as well as direct sales. The company did $250,000 in sales last year and is profitable. Interestingly, this new deal actually lowered the pre money valuation for the company. 75,000 for 10% implies a $675,000 pre money valuation.

Pre-Money Valuation 160

Pre-Money Valuation Alabama Valuation Churn Rate 160

Both Sides of the Table

FEBRUARY 17, 2011

A year ago I blogged about one of my most common mantras that applies to sales, biz dev & fund raising alike: “ Time is the Enemy of all Deals.&#. When times are really good for fund raising many teams delay to maximize their valuation. You’re offered a $9 million pre-money to raise $3 million (e.g.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Berkonomics

SEPTEMBER 27, 2018

Within three months, we easily obtained $3 million of investment at a pre-money valuation of $30 million. Three months later, another investor company in the business offered to invest $3 million at a valuation of $60 million. By this time there were not one but four million registered users.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Lightspeed Venture Partners

OCTOBER 1, 2012

The company did $1M in sales last year, 90% from wholesale, and had a 10% profit margin. They wanted to get to $10M in sales and then get bought by a big food company. pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation.

Pre-Money Valuation 152

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 152

YoungUpstarts

SEPTEMBER 4, 2017

For startup founders and CEO’s it’s also just as common to see them place too much focus on the amount of money raised, and the pre-money valuation, rather than the value that each investor can bring to the table. Ask yourself, where is your startup currently struggling? What could be improved?

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. Thus, $100,000 of gross revenue in the last 12 months might be extrapolated to $500,000 to $1 million in valuation.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Lightspeed Venture Partners

OCTOBER 22, 2012

This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). The sharks greeted this with skepticism, and rightfully so, especially given the short time the company has been in business and the relatively low sales volume.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet.   On the last line on page two of the workbook, you see the resulting returns to the entrepreneur with a variety of terms and valuations and assumptions. Let’s start at the end.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

NOVEMBER 4, 2011

In brief, a cap acts to place a limit on the conversion price of a convertible note such that investors are guaranteed a minimum number of shares for their bridge loans if the startup does a priced equity round at a high pre-money valuation – “high” meaning above the cap, which is often a heavily negotiated term. (The

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Gust

OCTOBER 20, 2011

This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target. In most regions, the pre-money valuation does not vary significantly from one business sector to another.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

ithacaVC

DECEMBER 13, 2013

There are many reasons for this, but fundamentally, it is impossible to calculate a share price for the investment round unless you have complete agreement on how many shares are outstanding pre-money. The share price is calculated by taking the pre-money valuation and dividing it by the number of shares outstanding pre-money.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Berkonomics

JUNE 12, 2014

Second rounds, if needed, often drive the founder(s) into a minority position, unless the company has grown significantly by that time and can command a higher pre-money valuation, giving less stock for the same amount of investment. Starting up Raising money Surrounding yourself with talent'

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Growthink Blog

JANUARY 24, 2011

The liquidation preference means what is sounds - namely that preferred stock holders with this right get all of their money back (i.e. liquidate their shares) before any distribution of proceeds in the event of a sale of a company. This is an extremely valuable preference that can best be shown by example.

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

The Startup Lawyer

JANUARY 10, 2012

A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. founders, option holders, etc.).

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

Berkonomics

SEPTEMBER 17, 2011

Within three months, we easily obtained $3 million of investment at a pre-money valuation of $30 million. Three months later, another investor company in the business offered to invest $3 million at a valuation of $60 million. In addition, I loaned the new company $150 thousand for working capital.

Liquidity Event 59

Liquidity Event Pre-Money Valuation Sales Valuation 59

K9 Ventures

MARCH 23, 2011

Let’s say the company raises $1M ($900K in new money, plus the $100K for the note, just to keep the math simple) at a pre-money valuation of exactly $1M (assume at $1 per share) – same as the pre-money cap in the note. What percent of the company should the note holder get on conversion?

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Seeing Both Sides

JULY 15, 2009

Entrepreneurs often mistakenly focus solely on the pre-money valuation while VCs look at multiple knobs in the negotiation to drive to a set of terms that, in total, they find acceptable. The first, and most focused on, is something called the pre-money valuation. What is the promote? Life isn’t fair.”).

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

This is going to be BIG.

MARCH 23, 2015

They''re at a similar stage to my investments now out of Brooklyn Bridge backing Tinybop pre-launch, Canary before their Indiegogo pre-sale, and VIXXENN with just an alpha site and a few stylists.

Post-Money Valuation 60

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

VC Cafe

SEPTEMBER 26, 2022

Sustainable growth: Prioritise sales efficiency over growth at all costs. Startups must grow to be successful, but the recent months have shown that simply throwing money at growth is not the solution. ValuatIon should be a function of value, not ego. In times of uncertainty, be like Scrooge McDuck! Our goals, their goals.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Both Sides of the Table

SEPTEMBER 5, 2012

As in, “your money into my company will convert at a 15-20% discount to the next round of capital I raise with a maximum price of $8 million pre-money valuation (or whatever the cap was).” What happens in a sale or acqui-hire? You give money and if the company sells you get your investment back?

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

ithacaVC

DECEMBER 14, 2011

One final background point, a “liquidation event” is a sale of the company and typically NOT an IPO. 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).

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Scott Edward Walker

APRIL 9, 2012

When investors receive shares of preferred stock, they are typically granted certain significant control rights, including a Board seat and veto rights with respect to certain corporate actions (such as the sale of the company) pursuant to so-called “ protective provisions.”

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Both Sides of the Table

FEBRUARY 25, 2010

million at a $15 million pre-money valuation. We had people hearing through the grapevine that we were about to raise money and new investors started calling us to get in on the deal. VC, sales, biz dev, M&A or otherwise. million at a $15 million pre-money valuation. Yes, this was stupid.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301