View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ).

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ).

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Hunter Walker

AUGUST 7, 2017

Employee options pools, typically created at the point of financings, shouldn’t be treated as haggling over dilution, but rather a strategic resource that will help founders build the best team and, by extension, a more valuable company. But employee option pool is important enough that I wanted to briefly expand upon my comment above.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Anti-dilution protection.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Gust

OCTOBER 17, 2011

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Anti-dilution protection.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Both Sides of the Table

MAY 30, 2018

If a VC prices a flat or down round it means that management teams are often taking too much dilution. It was 20 months ago and the founder clearly told me she has made great process (code words for higher price expected) She is raising $5–7 million and knows the range of valuations for this amount.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

View from Seed

SEPTEMBER 14, 2021

This post is inspired by some of the earliest conversations I have had with the team here at NextView and since the beginning of my VC journey. For context, seed-stage pre-money valuations are up 24% from H1 2020 to H1 2021. Early-stage valuations are up 70%, and late-stage valuations are up 103% (source Pitchbook ).

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Tim Keane

JANUARY 12, 2010

An average of these ranges results in a pre-money valuation of about $4MM.   If similarly situated companies are seeing $3.5MM pre-money valuations, this might become the target valuation. An average of these ranges results in a pre-money valuation of about $4MM.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

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

Gust

OCTOBER 21, 2011

In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes. Investors would be repaid their principal, plus accrued interest, divided by the conversion price (let’s say 30% discount, so 1 – 0.3 = 0.7). As above, this can get even better if the conversion discount also applies.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

The Startup Lawyer

FEBRUARY 4, 2011

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. 2) Scrutinize the Investment Structure.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

ithacaVC

JUNE 3, 2015

Quick explanation: a note with a valuation cap provides that upon a subsequent conversion of the note to equity resulting from a subsequent equity round (let’s say a Series A round), the note holder either converts at a price equal to (i) a stated discount to the Series A price OR (ii) a price determined using the valuation cap.

Liquidation Preference 40

Liquidation Preference Pre-Money Valuation Dilution Valuation 40

K9 Ventures

MARCH 23, 2011

The founders’ interest is to maximize the valuation of the company at the time of a follow-on financing, thereby minimizing founder dilution. However, the note holders’ motivation is to minimize the valuation of the company so that the dollars committed as part of their note convert in to as large a piece of the company as possible.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Feld Thoughts

JULY 29, 2011

Through a series of conversations, Jane and Dick have come up with the idea to develop a social network tailored to the medical community. That narrowed the possibilities down to an equity transaction, which would in turn require a conversation about valuation. of the company ($50k/$2M = 2.5%).

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Gust

OCTOBER 12, 2011

In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. Entrepreneurs generally prefer #2, provided it’s at a valuation that wouldn’t be absurdly dilutive given the amount of notes outstanding. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Both Sides of the Table

APRIL 14, 2010

Or you find out that management has been through a few rounds of dilution such that the management team only has 10-15% of the total equity of the company and as a new investor you know a priori that management is either going to quit soon after your investment or are going to ask you for a big increase in their equity package. Brain damage.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

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).” It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. ” 2.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Up and Running

SEPTEMBER 20, 2021

For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Here is an example of a cap table after a round of funding, with a pre-money valuation of $1 million. One of these terms is the valuation cap, ie.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Seeing Both Sides

JULY 15, 2009

A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). 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.

Pre-Money Valuation 49

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

Scott Edward Walker

APRIL 9, 2012

Part 2 will discuss the two most significant issues for founders in connection with the issuance of convertible notes: (i) the valuation cap and (ii) the discount (and how they interrelate). 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)

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. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. 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.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

thestartuplawyer.com

FEBRUARY 24, 2010

do not think being friends or relatives reduces the need for these difficult and/or awkward conversations. Because now you have more to lose than just a company and your (or someone else’s) money. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

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