Startup Professionals Musings

DECEMBER 11, 2022

After many years of working with angel investors seriously trying to find new ventures worthy of their hard-earned money, I find their frustration often exceeds that of entrepreneurs sincerely looking for financial help. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

The Startup Magazine

JULY 25, 2021

But existing shareholders are not happy with the company’s proposed plan to issue $500 million in new shares as it would only dilute its current float. In fact, the announcement of the share issue led to a decline in Galactic share prices and overall market valuation. Understand market share . Boost customer satisfaction.

Valuation 166

Valuation Artificial Inteligence Dilution Marketing 166

Startup Professionals Musings

JUNE 13, 2020

Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited angel investors. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds.

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

Startup Professionals Musings

AUGUST 4, 2014

Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Of course, all co-founders need to remember that allocated percentages will be diluted as angel and venture capital investors are brought in. But don’t get greedy.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

The Startup Magazine

MARCH 14, 2022

India has always been renowned as the land of entrepreneurs. The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. Here, the company’s valuation benchmark is set, and funding is solicited accordingly. And this has been the way of life here in India. 2) Seed funding.

Technical Review 156

Technical Review Due Diligence India Startup 156

Both Sides of the Table

FEBRUARY 8, 2016

The startup industry may be “resetting,” which doesn’t mean a “crash” but rather just a resetting of valuations, timescales, winners/losers, capital sources and the relative emphasis of growth rates vs. burn rates. We entrepreneurs have been spinning that line for decades in every boom cycle. Start early.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Valuation 150

YoungUpstarts

OCTOBER 24, 2013

One of the challenges for investing in startups has always been the lack of an established way for founders and investors to actually measure and decide on the valuation of the startup concerned. ” Ideaspotting investment pre-money valuation valuation Worthworm'

Pre-Money Valuation 150

Pre-Money Valuation Web Technical Review Angel Investor 150

Both Sides of the Table

SEPTEMBER 5, 2012

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

SEPTEMBER 28, 2014

In a world where the economy only heads in one direction (read: 2009-2014) most investors & entrepreneurs forget to pay attention to gross burn. Valuation. I wanted to call out special attention to valuation in this debate. If you’re raised at $250 million+ valuation even more cautious.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

MARCH 12, 2023

Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited angel investors. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds.

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. As an aside for founders, there is an interesting approach on how to arrive at equity offers outlined by Fred Wilson that may be worth checking out once there is a sense of valuation. All of the estimates displayed above are figures prior to any dilution.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Startup Professionals Musings

AUGUST 24, 2016

I always tell entrepreneurs that two heads are better than one, so the first task in many startups is finding a co-founder or two. Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Amount of venture funding provided.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Altgate

DECEMBER 15, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← No one wants to tell you your baby is ugly More on Liquidation Preferences → Pre-Money Valuation vs Number of Founders Posted on December 15, 2010 by admin Here’s a chart of the day worth sharing.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

Startup Professionals Musings

OCTOBER 17, 2022

Super angels sometimes drive up valuations. Perhaps because of their focus on building a large portfolio, or their competitiveness, these angels sometimes accept valuations that cause later friction while moving to VCs, or even other angel groups.

Angel Investor 342

Angel Investor Venture Capital Silicon Valley Portfolio 342

YoungUpstarts

SEPTEMBER 16, 2015

I love it when entrepreneurs start a pitch with a “Big Vision” and end it with their how their idea will achieve “World Domination.” However, equally important is the ability for entrepreneurs to break down that path to world domination into realistic milestones that line up with funding rounds. Set Quantifiable Goals.

Valuation 100

Valuation Dilution Chicago Technical Review 100

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. I have conversations with entrepreneurs and other VCs on a daily basis about fund raising, the prices of deals, how much companies should raise, etc. You can be pissed off, but I don’t set prices. That’s stupid.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

SEPTEMBER 10, 2021

I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. On the one hand, you’re over paying for every investment and valuations aren’t rational. Seed has become an option factory for many.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

OCTOBER 7, 2022

One of the big questions that every entrepreneur struggles with is how much funding they should request from investors in the first round. The average valuation for angel investments is $2 million, which will get you $500,000 for 20 percent of your startup. Are you flexible on the terms of the investment? Marty Zwilling.

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Startup Professionals Musings

MARCH 14, 2020

After many years of working with angel investors seriously trying to find new ventures worthy of their hard-earned money, I find their frustration often exceeds that of entrepreneurs sincerely looking for financial help. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 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

Startup Professionals Musings

JANUARY 4, 2020

One of the big questions that every entrepreneur struggles with is how much funding they should request from investors in the first round. The average valuation for angel investments is $2 million, which will get you $500,000 for 20 percent of your startup. Are you flexible on the terms of the investment? Marty Zwilling.

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Startup Professionals Musings

AUGUST 2, 2014

Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited Angel investors. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds.

Angel Investor 266

Angel Investor Entrepreneur Venture Capital IRR 266

The Next Web

NOVEMBER 20, 2013

So, let’s say that one founder puts in $100,000 in seed capital, that could be worth 20 percent of a seed stage company’s valuation. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. Entrepreneur Analysis and Opinion' How do you manage your equity split in your company?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Both Sides of the Table

SEPTEMBER 25, 2010

Not that they’re “such a bad idea&# but more that there are inherent problems for entrepreneurs in the process of raising angel money that need to be addressed. This leads to the problem of “herding cats&# for entrepreneurs raising angel money. Here’s where I feel common ground : 1. I agree on all points.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Startup Professionals Musings

JANUARY 19, 2020

Super angels sometimes drive up valuations. Perhaps because of their focus on building a large portfolio, or their competitiveness, these angels sometimes accept valuations that cause later friction while moving to VCs, or even other angel groups.

Angel Investor 314

Angel Investor Venture Capital Silicon Valley Startup 314

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

Both Sides of the Table

SEPTEMBER 29, 2009

But any entrepreneurs raising capital should keep in mind that this opening of the markets could possibly be temporary. They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Market downturn – We all know that investors move in herds.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Genuine VC

JULY 19, 2010

I think that the number of players in this devloping class of what I’d call “Micro VCs” will continue to increase over the coming years: the model fits into an opportunity on the capital supply side, as well as more importantly becomes the right product for many entrepreneurs on the demand side. Structural.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

Both Sides of the Table

OCTOBER 11, 2009

It’s mostly done by first-time entrepreneurs who want to persuade (bribe?) But if you approach them with a very fair valuation and ask for a small check (say $10k, which should be nothing to someone in this position) I believe you’ll have a reasonable shot at it provided that you actually have an interesting company.

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Both Sides of the Table

FEBRUARY 25, 2010

A reminder that it is important for all entrepreneurs is to remember to be careful about “deal drift.” 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. Morgan Stanley had proposed a higher valuation to let them in.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Berkonomics

FEBRUARY 23, 2023

Those of us in the business of calculating (guessing) this mythical peak in value often make the same mistake as our entrepreneurs. So, the question: load up with more equity and dilution? How do you know when you are at or near that right point to sell for maximum value? But there are wolves in the woods. Or sell now?

Dilution 62

Dilution Valuation Early Stage Equity 62

Feld Thoughts

MARCH 24, 2017

We also know many of the entrepreneurs in their portfolio. This means FC avoids trends and relentlessly questions entrepreneurs about how their product enables specific use cases and market opportunities. We know many firms that build portfolios with great logos by buying into companies at later stages and higher valuations.

Founder 75

Founder LP Technical Review Seed Stage 75

The Next Web

SEPTEMBER 13, 2013

Many Asian entrepreneurs tell me that they want to raise funds from Silicon Valley firms because they perceive the valuations to be higher. Asia’s entrepreneurs and investors have a much longer history of being scrappy and building massive businesses with very little upfront resources, because capital has always been so scarce.

Asia 132

Asia Silicon Valley India Term Sheet 132

Berkonomics

JUNE 5, 2014

Dave’s note: Popular Bill Payne returns this week with a thoughtful take on valuations. One entrepreneur has a company which appears to be scalable to a $30 million exit value in five to eight years, and a second entrepreneur’s venture seems to be scalable to $200 million in exit value in the same time frame.

Pre-Money Valuation 92

Pre-Money Valuation Valuation Angel Investor Dilution 92