Both Sides of the Table

MAY 28, 2018

Every VC knows that the amount you raise is often a proxy for your valuation. So when you say $8–10m is your goal and you aren’t at all thinking about your valuation know that a VC hears “$24–40 million pre-money valuation expectations.” In the next post I’ll give some advice on how to talk about valuation when a VC asks.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

JULY 23, 2014

We are in a bubble (with so many private $1bn+ valuations). pre-money valuation you certainly would want to exercise your right to continue investing if you had prorata rights. 15 years ago we were at the peak of Internet hype with the launch of many over-capitalized businesses with a market size & opportunity was limited.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

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

Both Sides of the Table

SEPTEMBER 10, 2021

I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. On the one hand, you’re over paying for every investment and valuations aren’t rational.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

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

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 22, 2012

After all, growth equals high valuations and loads of venture capital! Instant growth = huge valuation from follow-on investors = big VC mark-up on our quarterly reports = LP interest. Startups will continue to be aggressive in spamming us in our Facebook timeline. And headlines. And approbation. Grow or die.

Silicon Valley 390

Silicon Valley Venture Capital Startup Technical Review 390

Both Sides of the Table

AUGUST 12, 2010

Specifically we talked about Slide having gotten a $550 million valuation before being sold to Google for $182 million. Dan makes a point that you shouldn’t be telling everyone about your valuation as Slide did. He said it’s best to talk about valuation only when you sell (if at all). Minutes 4 – 8. Minutes 11-13.

Seed Stage 232

Seed Stage Valuation Private Equity Venture Capital 232

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Both Sides of the Table

MARCH 1, 2016

LPs See The Over-Valuations and Don’t Like It. LPs have followed the recent press about the over-valuation and over-funding of the startup industry, and they experience these phenomena first hand. All isn’t completely rosy in the LP views of the venture industry. The Biggest Area of Concern is Late Stage Investments.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Both Sides of the Table

JUNE 30, 2011

A normalization of the venture capital market will bring more rational valuations over time but should produce more stable companies and better returns for VCs and LPs. It doesn’t feel like that now because we’ve entered a mini bubble in pre IPO valuations for a segment of the tech market but this, too, shall pass.

Venture Capital 289

Venture Capital Early Stage Valuation Angel Investor 289

Both Sides of the Table

SEPTEMBER 29, 2009

They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Should VC’s really be impacted by public market valuations when the money that they’re investing today should be for returns in 7-10 years? Short answer – yes. The deal was done in late 2007.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

SEPTEMBER 25, 2010

Either would be fine with startups, so long as they can easily change their valuation. When I was raising money in late 1999 I had an investment team in Germany (I was in the UK) suggest that they should get a lower valuation than others because they were ex McKinsey guys and had better access to industry. I agree on all points.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

NOVEMBER 10, 2021

And today, as the company announces their latest funding round of $125M at a $1B+ valuation , I’m still thrilled to back Density as they are growing massively with customers like Uber, Shopify, Delta, and Cisco, among many others. Quite simply, the data that Density provides?

Valuation 249

Valuation Conversion Employee Customer 249

Both Sides of the Table

OCTOBER 11, 2009

But if you approach them with a very fair valuation and ask for a small check (say $10k, which should be nothing to someone in this position) I believe you’ll have a reasonable shot at it provided that you actually have an interesting company. At a $2 million valuation this is 0.5% of the company – about right.

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Both Sides of the Table

APRIL 15, 2010

billion valuation. They only recently raised $30 million at around a $300 million valuation and THAT raised eyebrows. The investor isn’t disclosed (or I haven’t seen it) but it’s rumored to be DST, the Russian investors who invested in Zynga and Facebook (at a $10 billion valuation).

Venture Capital 271

Venture Capital Affiliate Valuation San Francisco 271

Both Sides of the Table

AUGUST 14, 2009

If you’re three s -hot kids from Stanford, Caltech or MIT you might be able to push valuation higher. Because I believe that getting the best possible angels around the table is far more important than ultimate valuation. Your angels are happy when you do the VC round because it is a “step up&# in valuation if possible.

Silicon Valley 291

Silicon Valley Ireland Technical Review Valuation 291

Both Sides of the Table

JULY 27, 2014

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. Video 1 is here : Late stage valuations are in a mini bubble. This can’t all be driven by increased company performance).

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Both Sides of the Table

MAY 4, 2013

As an early-stage investor that is not always aligned with my goal, which I would express as, “pay the right price for the stage & risk in a way that is fair to the founders yet preserves our ability to grow into our valuation at the next financing event.” It makes it extraordinarily hard to raise the next round of capital.

Deal Flow 347

Deal Flow Early Stage Investment Bankers Technical Review 347

Both Sides of the Table

APRIL 18, 2019

The valuations were too high! (luddite is literally the term for the people in England who put wrenches in the machinery in the industrial revolution and broke things to prevent progress). Act III was the “I told you so” comeuppance of anybody who we sure that the electric scooter market would fail. We are now in Act IV.

South America 250

South America Global New York City Software Review 250

Both Sides of the Table

JULY 6, 2016

It is these stories that helps me bond more with the team because I’ve personally experienced just about every kind of setback at my first startup: Raising too much capital, too quickly & at too high of valuations Hiring too quickly and too senior Building too much functionality before market validation Charging too much, keeping prices too high (..)

South Korea 261

South Korea Silicon Valley Los Angeles Japan 261

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

Both Sides of the Table

AUGUST 14, 2017

Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. The administrative work we actually do at board meetings?

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Both Sides of the Table

FEBRUARY 6, 2019

Valuations are out of control” is the mantra of others. If you look at some high-profile tech companies funded in the last big VC cycle you had eBay, Amazon, Salesforce & Google each go public having raised < $100 million in VC TOTAL prior to IPO and their last private-market valuation were all sub $400 million.

Venture Capital 292

Venture Capital IPO Mezzanine Early Stage 292

Both Sides of the Table

FEBRUARY 12, 2019

thus the rise of “pre seed” investing).

Venture Capital 328

Venture Capital Technical Review Seed Stage IPO 328

Both Sides of the Table

SEPTEMBER 23, 2010

At what valuation? So if two investors even go so far as to agree to fix prices, which is issue 1, the company should say no thanks to that valuation and keep shopping for other lenders, of which there are many, to get a better price. Have you looked at competition? How well financed is the competition? What is their market traction?

Entrepreneur 292

Entrepreneur Technical Review Stealth Valuation 292

Both Sides of the Table

FEBRUARY 9, 2014

As an entrepreneur I think it’s far more important to seek out investors who love you (no matter what) than it is, for example, to maximize valuation or find the perfect VC brand.

Video 373

Video Valuation Differentiation Distribution 373

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

Both Sides of the Table

APRIL 14, 2012

Did raising money at a $500 million valuation help secure the $1 billion deal? “it’s smart to use an impending investment valuation to drive a higher acquisition valuation” I would like to amend her statement slightly to read, “it’s smart to use an impending investment valuation to drive an higher acquisition.”

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Both Sides of the Table

FEBRUARY 16, 2017

We felt proud to be the lead investor in Maker Studios at a sub $5 million valuation. There will be more enormous successes in Los Angeles and it’s our job to get into enough of these. We feel very proud about the success of Ring and our investment in Jamie Siminoff who is amongst the most talented tech leaders in LA or the country.

IPO 214

IPO Los Angeles Technical Review Silicon Valley 214

Both Sides of the Table

APRIL 21, 2020

A seed deal hasn’t already been “priced up” to a range where a new investor might be concerned about the valuation relative to performance. Optimize for a 1 not a 0 more than exact valuations now. Valuations may have changed and “price discovery” in private markets is harder to determine. Raise when you can.

Marketing 263

Marketing Valuation Churn Rate Balance Sheet 263

Both Sides of the Table

FEBRUARY 4, 2016

They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system. Median pre-money valuations skyrocketed – shooting up 3x in just three years as investors competed to christen imaginary animals with imaginary valuations. So what happened?

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Both Sides of the Table

OCTOBER 21, 2009

Pure Digital to Cisco) but that even the 2nd largest will get much lover valuations. cheap) but there was a sentiment that some funds will likely be raised in the next 3 years to buy out VC positions at more fair valuations. . Jamie’s view is that the healthiest company in any sector will still command outsized returns (e.g.

Technical Review 241

Technical Review IPO Southern California Venture Capital 241

Both Sides of the Table

MARCH 21, 2013

It also is a great way to finance your business without facing dilution before you actually raise venture capital and when the valuation you might get from angels is less than you’d want. So it wouldn’t bother me if 90% of your year-one revenue was PS provided it was done with a specific plan for year-2 software sales.

Software Review 321

Software Review Software IP Technical Review 321

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

Both Sides of the Table

MARCH 3, 2012

The truth is that I wasn’t as valuation sensitive as my original VC partner was and I would have been willing to raise price. He told me he wondered if we should consider switching partners so the company could get more money and at a higher price. I told him that if he did he’d have to do the round without me.

Term Sheet 356

Term Sheet Silicon Valley Reputation Partner 356

Both Sides of the Table

AUGUST 25, 2015

When they’re bullish venture valuations go up, LPs put more money into VCs, more angels want to get involved, new entrants (hedge funds, mutual funds) feel their missing out and the overall venture market goes us. private valuations go down (slowly because they only adjust at funding intervals or M&A); 0r. So now what?

Balance Sheet 150

Balance Sheet Valuation Burn Rate Stock 150