ReadWriteStart

OCTOBER 7, 2010

So at any point, if you are trying to raise money, and you are hearing from investors that you are too early and have too little validation, it may be a good thing. As a thumb rule, try to get enough validation so that you can get to at least a $2 million pre-money valuation before raising equity capital. Trendy Loot.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

Gust

JULY 23, 2014

I almost never invest in ideas or plans, so you’ll need to have a company and at least a product, if not customers. You’ll need to have invested significant cash (whatever that term means to you) in your own company, and you’ll need to have the core of your team in place (typically a techie and a marketer, at a minimum.)

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Both Sides of the Table

SEPTEMBER 29, 2009

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. Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. I argued for literally a year to slash burn.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

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

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

YoungUpstarts

SEPTEMBER 15, 2018

The pre-money valuation of other startups is based on the following factors. Your investors will be interested in knowing the total number of customers who are actually paying you. Here it should be mentioned that “quantifiable” revenue is a must even if you are ready with a pathbreaking idea.

Pre-Money Valuation 124

Pre-Money Valuation Valuation Sweat Equity Startup 124

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. The right number to focus on is pre money valuation as that is how an investor is valuing the company before the investment. Post money valuation = Pre money valuation + Investment.

Pre-Money Valuation 163

Pre-Money Valuation Post-Money Valuation Valuation Dilution 163

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! 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. customers who paid for services often get burned. I said that at the Founder Showcase, too.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

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

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

Both Sides of the Table

JULY 27, 2014

Most of those industries are fee-based and are competing on revenue growth. Four years ago people paid $66m median pre-money valuation and are now paying $155m. I don’t totally agree with that view. Venture is a returns based and I believe has different characteristics.

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Both Sides of the Table

FEBRUARY 15, 2016

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. In other words, raising $2 million at a $6 million pre-money valuation has always been easier & quicker than raising $20 million at any valuation.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

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. First priority is real revenue, customers and contracts. Future revenue projections are not relevant at the pre-revenue stage.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Lightspeed Venture Partners

OCTOBER 7, 2012

They won a design award at a trade show, but have no revenue and no orders. This includes calling current and prospective customers, understanding technology and manufacturing, doing reference calls on the founders and key executives, verifying financial and legal information and often other items specific to the company.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Agile VC

MAY 26, 2011

LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point. round which closed in November 2003, and the pre-money valuation between $10 million and $15 million. It was a $4.7M

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later. This is typically a $6-10m round.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Tim Keane

JANUARY 12, 2010

3]   However, if they are built bottom up, they demonstrate and make explicit a range of business model assumptions the entrepreneur is using to think about his business and its revenue model. An average of these ranges results in a pre-money valuation of about $4MM. stake in the company. The Consideration of Risk.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Magazine

SEPTEMBER 12, 2019

Tempted by large sums of money and the perceived validation that comes along with being funded, founders turn to venture capitalists to accelerate their company’s growth. Venture funding isn’t real validation – market traction and continued profitability and revenues are. Focus on Product Development First.

Early Stage 85

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 85

BeyondVC

APRIL 12, 2005

Combine this relative value with the fact that many tech companies, particularly large software companies, derive 50-70% of their revenue from annual recurring maintenance and you have an opportunity to buy out many of these businesses due to their predictable cash flow.

LBO 60

LBO Pre-Money Valuation Technical Review Software Review 60

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later. This is typically a $6-10m round.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

David Teten

FEBRUARY 9, 2015

The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital. If you are testing the market to see what terms you can get, just say, “We are targeting to raise $X at pre-money valuation of $Y.”

Venture Capital 60

Venture Capital Pre-Money Valuation Prospectus Early Stage 60

www.paulgraham.com

OCTOBER 23, 2010

You need three things to create a successful startup: to start withgood people, to make something customers actually want, and to spendas little money as possible. The woman in charge of sales was so tenacious that I used to feelsorry for potential customers on the phone with her. Paul Erdos wasparticularly good at this.

Startup 105

Startup Cofounder Software Stock 105

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.&# Future value is key.

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. By which I meannot that it has to make something physical, but that it has to haveone thing it sells to many people, rather than doing custom workfor individual clients. Custom work doesnt scale. To be a startup, a company hasto be a product business, not a service business.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Seeing Both Sides

NOVEMBER 30, 2008

For the last five years, it was not atypical for a high-quality Series A company that raised an initial round of capital priced at, say, $5 million on a $5 million pre-money valuation to hit a few important milestones (e.g., Where prices are really getting hammered in the VC-backed world is in Series B and Series C rounds.

Pre-Money Valuation 20

Pre-Money Valuation Portfolio Post-Money Valuation Valuation 20