Ben's Blog

JULY 16, 2013

What about the efficient market hypothesis? Aren’t markets rational? If markets behave rationally, one might expect the ratio of price to earnings to be reasonably stable over the period (click here for complete data set). Because markets are not logical; markets are emotional. Yes, we did a down round.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

ithacaVC

FEBRUARY 1, 2018

In this situation, the FFAs are diluted from an ownership percentage, but enhanced economically. Or the economy tanks or stock market tanks moving valuations down at inopportune times for the startup. Or the economy tanks or stock market tanks moving valuations down at inopportune times for the startup.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

VC Cafe

FEBRUARY 27, 2024

Seed is about showing initial product market fit. Below are just a few contributors to the rise of pre-seed in the current market: Explosion of Micro funds – In recent years, there’s been a steep increase in the number of micro funds, which are generally below $100M in size. who’s talking to customers?)

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Ben's Blog

JULY 16, 2013

What about the efficient market hypothesis? Aren’t markets rational? If markets behave rationally, one might expect the ratio of price to earnings to be reasonably stable over the period (click here for complete data set). Because markets are not logical; markets are emotional. Yes, we did a down round.

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

VC Cafe

JUNE 10, 2022

The market correction has come for series A and seed startups. For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. But recently those round sizes and valuations have tumbled to about $10 million and $50 million, respectively, he said.

Valuation 152

Valuation Marketing Venture Capital 152

This is going to be BIG.

JANUARY 17, 2016

The public markets have been stumbling around lately, trying to figure out what China and oil prices mean for the rest of the world economy. Fear, not surprisingly, weighs markets down. They might have to get another round in, and that round will most certainly be a down round.

Dilution 60

Dilution Portfolio China Down Round 60

Both Sides of the Table

FEBRUARY 8, 2016

And when prices are dropping on a VCs existing companies in market, there is a substantial reduction in FOMO (fear of missing out) for new deals, which means that investors take their time in making investment decisions. Optimize for a W more than % dilution in these circumstances. Down rounds are corrosive.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

Gust

SEPTEMBER 17, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. Me: More dilution? A down round? I’m not sure.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. With the public markets down, these groups began writing down Unicorn valuations. Emotional Biases.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

I recently survey more than 150 VC friends from all stages and geographies what they thought about the market by asking “Which of the following statements best describes your mood heading into 2016?” I’ll spare you the math and point out that this means we funded 0.104% of the market. In short – no.

Valuation 150

Valuation Down Round Startup Later Stage 150

www.paulgraham.com

APRIL 28, 2010

As a company gets more established,its valuation gets closer to an actual market value. Whatkind of anti-dilution protection do they want? The disadvantage of taking money from less known firms is thatpeople will assume, correctly or not, that you were turned down bythe more exalted ones. Hell if they know.In

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

This is going to be BIG.

MARCH 3, 2019

How then, do you expect to make money when you’re buying on the public market? First, price discipline doesn’t work in overly competitive markets. When there are too many funds in a market, keeping your entry price reasonable is going to get you shut out of a lot of deals. Everyone knows the answer to that. Buy low, sell high.”

Portfolio 110

Portfolio Burn Rate LP Distribution 110

Both Sides of the Table

MARCH 30, 2016

It is an heroic accomplishment in a brutal fund-raising market in which only market leaders can bring in that sort of money. Every VC who’s been the business for a long time realized first hand that the VC markets were changing rapidly as early as Q3 of 2015. But of course public markets had begun gyrating. $30 million.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Reid Hoffman

JUNE 8, 2021

And all of the other smart and operational decisions that have enabled Airbnb to weather the storm and go on to have one of the most successful public market debuts. It’s a market. And I thought, well, no one’s marketing. And I made a decision not to do an equity round, because I thought it would be a down round.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

NZ Entrepreneur

JULY 8, 2019

I made my first investment in the stock market when I was 12 years old. If a valuation is too low, the founders become over-diluted over time and will struggle to do a later series A or B raise if they’re sitting at single digits – global venture capitalists (VCs) won’t touch this scenario. I killed it, everyone did. Valuations.

New Zealand 42

New Zealand Entrepreneur Valuation Dilution 42

Bryce Dot VC

APRIL 21, 2016

“Why the Unicorn financing market just became dangerous…for all involved.” This wasn’t the first time that Bill has sounded this alarm, nor is he the only one to have been calling out bad behavior in the VC funding market. You have been told to be “bold” and “ambitious” and that there is no better time to grab market share.

Silicon Valley 40

Silicon Valley Dilution Term Sheet Down Round 40

A Crowded Space

MAY 31, 2016

We expect there to be an increase in down rounds, flat rounds, inside rounds and various pay-to-play scenarios. The great companies that are breaking out will be fine in any market. But, this year we’ve seen the greed of the last several years switch to fear. 3) All insiders are supportive.

Cram Down 60

Cram Down Pay to Play Angel Investor Warrant 60

Reid Hoffman

JUNE 8, 2021

And all of the other smart and operational decisions that have enabled Airbnb to weather the storm and go on to have one of the most successful public market debuts. It’s a market. And I thought, well, no one’s marketing. And I made a decision not to do an equity round, because I thought it would be a down round.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

www.quora.com

SEPTEMBER 22, 2011

There's more visibility for the company, sure, but how clear is that vision after they've raised a seed round? This is a far cry from a sustainable business, product-market fit, and a long ways from profitability in most cases. They've got a handful of customers, maybe a few thousand users, and some initial traction.

Equity 40

Equity Employee Founder Cofounder 40