Both Sides of the Table

JUNE 5, 2015

” Today I want to talk about how a VC thinks about equity pricing on your round and particularly if you’re coming off of a convertible note. In the old days VCs funded off of a “pre-money” valuation. the old days of $5 million on $20 million pre). Those are the big three.

Pre-Money Valuation 150

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

The Startup Lawyer

FEBRUARY 4, 2011

But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. So co-management is the second group to share in the bounty upon a liquidity event.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

The Startup Lawyer

JUNE 22, 2010

The main feature of the convertible note is that the debt investment made by the angel investor will typically later convert into equity. For this article, let’s assume this equity is the Series A Preferred Stock purchased by a venture capital fund. Convertible Note Discount. As a sweetener to the angel investor (i.e.,

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

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

Individual accredited investors in typical angel deals put personal capital at risk for an equity share of growth-oriented, start-up companies. In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 A local network of angels is critical to achieving a diversified portfolio.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. management, founders, angel investors) get any money. The list goes on. Legacy deals have “hair.&#. And herein lies the problem. But pass they will. Brain damage. Reputation.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. Patrick Collison , self-made billionaire founder of Stripe. Bill Gates , founder of Microsoft. ValuatIon should be a function of value, not ego. Our goals, their goals.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Scott Edward Walker

APRIL 9, 2012

As a result, the pendulum has swung dramatically in the founders’ favor, and the issuance of convertible notes for seed financing has never been more prolific. Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) What is a Convertible Note?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Altgate

MAY 24, 2012

Mark Zuckerberg and his executive team have been extremely successful at retaining equity in their company. But how well do most other founders do? Even as Facebook prepares to go public, Mark Zuckerberg, the founder and CEO, still owns 28% of his company. million, with a valuation of $10 million. How did they do this?

Pre-Money Valuation 43

Pre-Money Valuation Cofounder Dilution Valuation 43

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. ” They are running out of money.

Recapitalization 70

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

venturehacks.com

OCTOBER 21, 2010

If you don’t keep your eyes on the option pool while you’re negotiating valuation, your investors will have you playing (and losing) a game that we like to call: Option Pool Shuffle You have successfully negotiated a $2M investment on a $8M pre-money valuation by pitting the famous Blue Shirt Capital against Herd Mentality Management.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

www.currentlyobsessed.com

MAY 28, 2010

Instead of “We are worth about $5m because we have done XYZ and we need to raise $1m, so let’s sell 20%&# it’s better to think about valuation as an output variable, like “Let’s raise $2mm and sell 33%, our (pre-money) valuation is therefore $4mm.&# For example, liquidation prefs.

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42

Startup Lessons Learned

JUNE 19, 2019

Andy Rachleff co-founded the venture capital firm Benchmark Capital in 1995. It was a lot less appealing to me to be a growth equity investor, but that's not why I retired. So we made a pact among the founders that when any of us reached the point that we weren't willing to go 110%, you had to opt out.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159