View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Source: AngelList.

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

AUGUST 17, 2021

90% of the airtime around ownership and valuations is focused on what happens when the first check is written. Effective post money is the effective valuation of an investor’s dollars at any one time. at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money.

IRR 156

IRR Dilution Founder Portfolio 156

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Source: AngelList.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

ReadWriteStart

JANUARY 13, 2024

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

View from Seed

AUGUST 17, 2021

90% of the airtime around ownership and valuations is focused on what happens when the first check is written. Effective post money is the effective valuation of an investor’s dollars at any one time. at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money.

IRR 136

IRR Dilution Founder Portfolio 136

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

MARCH 14, 2020

Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation. Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Investors are looking to buy a chunk of the business, not the product.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. That’s the concept of what some call mathematical dilution. Suppose it raises $2 million at a $6 million pre-money valuation.

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. Or is there a major disconnect between a portfolio’s valuations and the actual dollars returned to LPs? Source: AngelList.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Genuine VC

JULY 19, 2010

But leveraged distribution via platforms (organic/paid search, social networks, mobile devices) and self-service monetization (ad networks, app stores, payments) is what has truly empowered startups to become real scalable businesses on very small amounts of initial capital.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Both Sides of the Table

NOVEMBER 14, 2017

We realized that operating a business in distributed markets presented multi-city coordination efforts that we weren’t prepared for. were more distributed. The flawed assumptions are now kind of obvious but when you’re running at a thousand miles an hour it’s easy to miss some signs.

Operations 286

Operations New York City Technical Review Startup 286

Lightspeed Venture Partners

SEPTEMBER 21, 2013

to fund the company at a $6M post money valuation from a number of investors including Selena Gomez. pre money valuation and planned to use the money to market the app. pre money valuation). pre money valuation. pre money valuation and a $2.7M The smartphone app that enables this is free but it costs $2.49

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

David Teten

JANUARY 19, 2021

Yes, via conversion rights at a valuation cap. Yes, via conversion rights at a valuation cap. Flexible VC creates early liquidity which can be either reinvested or distributed to LPs. Capacity Capital, Greater Colorado Venture Fund, Indie.VC, Reformation Partners, UP Fund, Versatile VC. Flexible VC: Compensation-based.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Startup Company Lawyer

MARCH 14, 2010

If new investors get better rights in a future equity financings (such as registration rights, price-based anti-dilution, redemption rights, etc.), The liquidation preference would not apply in this situation, and any distribution to stockholders would trigger the dividend preference. Anti-dilution protection. under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

AUGUST 1, 2016

Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation. Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Investors are looking to buy a chunk of the business, not the product.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Lightspeed Venture Partners

NOVEMBER 19, 2012

The first 15,000 units sold out in six weeks in specialty retailers that distributed it in the Quantico area, and another 80,000 are being made now. Interestingly, this new deal actually lowered the pre money valuation for the company. 75,000 for 10% implies a $675,000 pre money valuation.

Pre-Money Valuation 166

Pre-Money Valuation Alabama Valuation Churn Rate 166

www.inc.com

SEPTEMBER 24, 2011

Besides the future potential earnings youre forgoing, youre also diluting your own ownership in the company. As you think about how much equity to offer, have a reasonable valuation in mind thats been determined using professional advice. CDW your 1-stop resource for configuration, activation & distribution. Toshiba Laptops.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Austin Startup

MARCH 23, 2017

Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54

Up and Running

MAY 21, 2015

All the other sharks typically make a traditional equity investment; for example they’ll invest $100,000 at a $1,000,000 business valuation, and take 10 percent of the business. They generally also get additional rights that common shareholders don’t get, such as anti-dilution protection, and liquidation preference (discussed further below).

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Lightspeed Venture Partners

OCTOBER 14, 2012

The entrepreneur is seeking not just money, but primarily contacts with buyers at big retailers to get wider distribution. They argue over who can help Cozy Bug with distribution more. Kevin’s offer seems to be pretty attractive given that there is no equity dilution. Three sharks make an offer. Kevin offered $50k.

Equity 164

Equity Dilution Redemption Distribution 164

The Equity Kicker

MAY 14, 2012

There are certain types of events that investors look to as evidence that a company has overcome certain challenges and has therefore reduced risk in the business and become deserving of a higher valuation. signing distribution deals. demonstrating that signed distribution deals are working. achieving first revenues.

Finance 118

Finance Valuation Venture Capital Dilution 118

Lightspeed Venture Partners

OCTOBER 22, 2012

This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). Most of the sharks dropped out due to valuation being too high, but Robert and Barbara showed interest. If the company really has done $100k in profit year to date, this is a laughably low valuation.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

VC Cafe

JUNE 10, 2022

According to new research by Pitchbook , the trickle down effect has already started in seed and series A startups with round sizes and valuations shrinking in size compared to 2021. But recently those round sizes and valuations have tumbled to about $10 million and $50 million, respectively, he said. Lemkin #????????????

Valuation 151

Valuation Marketing Venture Capital 151

View from Seed

JUNE 30, 2015

Or maybe you are just a bit off on your product, or else you needed more experimentation to get to the right strategy for distribution. think about terms (you may get more dilution later, but you don’t want to create valuation overhang either), and think about your pace of capital deployment (slow until you have strong PMF).

Seed Stage 120

Seed Stage Syndicate Syndication Dilution 120

Small Business Force

JANUARY 14, 2016

It is also less understood than it should be, with dilution and control issues being major points of concern. The point of it was that with any kind of equity distribution, dilution will always occur. Real world example of valuation Your 80% is now worth $5.6 Real world example of valuation Your 80% is now worth $5.6

Equity 20

Equity Dilution Distribution Valuation 20

Scott Edward Walker

JULY 7, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. What Does a Redemption Rights Provision Look Like?

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

thinkspace.com

SEPTEMBER 7, 2012

The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? The one thing that I think is missing is distributing equity to every single employee in the company regardless of title. Title Range (%).

Equity 62

Equity Employee Founder CTO Hire 62

abovethecrowd.com

APRIL 20, 2016

One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. By January of 2016, that number had ballooned to 229.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Professor VC

JUNE 20, 2011

The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. One truth of start-up financing is that it generally takes twice as long and twice as much money to accomplish your milestones.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

NZ Entrepreneur

JULY 8, 2019

I waited for the ‘casino-like’ world of startup investing until I was 28 years old, putting $10,000 into a friend’s software distribution company – a tidy sum for me at that age. Valuations. This often carries the double whammy of dilution. So I splashed out and bought a gigantic pack of pick ‘n’ mix.

New Zealand 42

New Zealand Entrepreneur Valuation Dilution 42

Austin Startup

AUGUST 1, 2017

This is most clearly highlighted in the “unicorn” boom we all saw over the past few years, where founders raised very large rounds, with terms very onerous to the underlying common stock, hoping they could eventually justify billion dollar valuations to skeptical acquirers or public market investors. Angels/Seed Funds v.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

Lightspeed Venture Partners

SEPTEMBER 16, 2012

The founder wanted to take the offer, but he called his advisor (his business school professor) who told him it was too much dilution for this stage, so he turned it down. The founders clearly believed in the upside of the company and that is why they were willing to take a lower valuation but wanted minimal dilution.

Silicon Valley 167

Silicon Valley Salary Dilution Indiana 167

Professor VC

DECEMBER 8, 2015

I think we will see more of these in 2016 and beyond as IPOs are still far and few between and unicorns struggle to justify their stratospheric valuations. Not surprisingly, the merger was highly dilutive, particularly to Confinity/PayPal shareholders. But what about the case where both companies are well capitalized and doing well?

Merger 28

Merger LP IPO Redemption 28

Scott Edward Walker

JUNE 9, 2011

The investor would thus be entitled to the first $10 million pursuant to its liquidation preference, and the remaining $90 million would be distributed ratably to the common stockholders.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Startup Lessons Learned

JUNE 19, 2019

So the venture process was all about trying to figure out whether or not people could deliver what they said they could, and you typically invested as early as possible at a $5 million pre-money valuation, hoping the company would be worth $500 million, in which case you'd make 20 to 30 times your money. It's a horrible risk/reward.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

Up and Running

DECEMBER 9, 2014

The pro is that it’s cheap capital and it’s not diluted. This is really an exciting panel to be a part of. Bates: Fantastic. As a business owner, the most valuable asset you have is your time so there’s an inherent compromise there.

Small Business 95

Small Business Finance Forecast Metrics 95