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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.

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The best advice startups will never follow

Berkonomics

There’s a common expectation among entrepreneurs that seed money from family is great – letting close relatives in at the ground floor. Don’t talk yourself into a high valuation for the first round of financing for any reason…. Every contact should be a learning experience.

Valuation 127
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The best advice startups will never follow

Berkonomics

There’s a common expectation among entrepreneurs that seed money from family is great – letting close relatives in at the ground floor. Don’t talk yourself into a high valuation for the first round of financing for any reason , even if your hair is on fire and the idea is worth billions.

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How to Fund a Startup

www.paulgraham.com

It wasnt because they werent accredited investors that I didntask my parents for seed money, though. When we were starting Viaweb,I didnt know about the concept of an accredited investor, anddidnt stop to think about the value of investors connections.The reason I didnt take money from my parents was that I didntwant them to lose it.

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How to Start a Startup

www.paulgraham.com

Like most startups, ours began with a group of friends, and it wasthrough personal contacts that we got most of the people we hired.This is a crucial difference between startups and big companies.Being friends with someone for even a couple days will tell you more than companies could ever learn in interviews. [2] This is calledseed capital.

Startup 105
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Top Startup Advisor Paul Graham Just Warned Against Taking Google's Money

www.businessinsider.com

This Chart Shows Why VCs Are Willing To Give Hyped Startups Absurd Valuations. Parse, one of the most-anticipated startups in Silicon Valley these days , went through Y Combinator last year and raised seed money from Google Ventures , for example. But the convertible cap has increasingly been used as a guide for valuation.

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The Series A crunch is hitting now. Have we even noticed?

pandodaily.com

If you are raising a seed round now, there are a few things you can do to protect yourself. There are still the same debates on whether or not you should take seed money from VCs. Lastly, seed-stage entrepreneurs who have pushed for the maximum valuation possible haven’t done themselves any favors.