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 162

Valuation Artificial Inteligence Dilution Marketing 162

Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? What the entrepreneurs were really saying is, “I don’t want to take a lower valuation now, while I don’t have customers or a full team. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

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

Both Sides of the Table

SEPTEMBER 10, 2021

And the loosening of federal monetary policies, particularly in the US, has pushed more dollars into the venture ecosystems at every stage of financing. What Has Changed in Financing? On the one hand, you’re over paying for every investment and valuations aren’t rational. even before the pandemic itself has been fully tamed.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

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

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

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. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

ReadWriteStart

JUNE 1, 2020

If you are facing any problem you can always check out this: Business Loan vs. Equity Financing. The bridge or exit stage is generally of very large transactions and for companies with substantial valuation. Raising higher capital at an early stage means more equity to be diluted to the investors. Inception stage.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

View from Seed

DECEMBER 4, 2019

Over the last 10 years, we’ve been in a bull market with considerable froth in late stage financing activity and valuations. The cases of WeWork and Uber cast a cloud of doubt over funds that are largely driven by one or two outlier companies that may have a tremendous valuation, but shaky underlying business metrics.

LP 256

LP IRR Distribution Portfolio 256

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

AUGUST 14, 2017

ICOs certainly have a place in startup financing. Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. The administrative work we actually do at board meetings?

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

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. Thus begins the dance.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

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. To me, that is no different than financing the business. How important is this person’s role?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Berkonomics

AUGUST 10, 2023

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock. Draconian terms?

Liquidity Event 116

Liquidity Event Initial Public Offering Dividend Valuation 116

Feld Thoughts

FEBRUARY 28, 2023

Corporate law: In Germany, most companies in general and most VC-financed companies are structured in the legal form of a “Gesellschaft mit beschränkter Haftung” (GmbH). Often, this integration results in VC-financed GmbH companies having little to do with the GmbH as envisaged by the law.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. What not to include is directly stating valuation expectations.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Both Sides of the Table

MARCH 21, 2013

It also is a great way to finance your business without facing dilution before you actually raise venture capital and when the valuation you might get from angels is less than you’d want. By year 2 I’d like to see PS at 50% maximum, which is still high.

Software Review 321

Software Review Software IP Technical Review 321

Both Sides of the Table

SEPTEMBER 29, 2009

They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. Should VC’s really be impacted by public market valuations when the money that they’re investing today should be for returns in 7-10 years? Short answer – yes.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Not to mention the fact that every time you compensate with equity, you dilute your own ownership of the business. Plan upfront.

Equity 116

Equity Stock Options Vesting Stock 116

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Him: $12 pre.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Genuine VC

JULY 19, 2010

With that choice, they’re maximizing their full Series A options, potentially reducing ultimate founder dilution, and retaining flexibility for strategic options (including exit) along the path – all while raising money with a more efficient diligence and decision-making process.

Seed Stage 175

Seed Stage Technical Review Dilution Offshore 175

ReadWriteStart

JANUARY 27, 2011

And, oh by the way, we also really like the idea of the 1M/1M entrepreneurs building valuation and negotiating leverage through these business development efforts, instead of signing off large chunks of their company in form of equity early on. The business is already profitable with $2.9 million in revenue. Well, I didn't think much of it.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

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. The data presents a historical insight on a cap table that can affect the valuation of your startup when it comes time for a new round of fundraising. Total share ownership.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Berkonomics

JUNE 5, 2014

Dave’s note: Popular Bill Payne returns this week with a thoughtful take on valuations. Yet, at the pre-revenue stage of development, angel investors price both companies at a pre-money valuation of $1.5 Yet, at the pre-revenue stage of development, angel investors price both companies at a pre-money valuation of $1.5

Pre-Money Valuation 92

Pre-Money Valuation Valuation Angel Investor Dilution 92

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. In the old days VCs funded off of a “pre-money” valuation. It’s very simple.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Feld Thoughts

MARCH 24, 2017

In general, these investments were rarely competitive at the time of their first financing. They’re a rare venture fund that doesn’t exercise pro-rata rights over the lifetime of an investment, meaning they dilute alongside company founders, which they believe better aligns their interests as seed investors with the entrepreneurs.

Founder 75

Founder LP Technical Review Seed Stage 75

Up and Running

DECEMBER 9, 2014

Bates: Good morning and welcome to our CEO panel, “How to Fine-Tune Your Small Business Finances From Funding to Growth” which I think is the direction that we would all like to be going. I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth.

Small Business 95

Small Business Finance Forecast Metrics 95

Both Sides of the Table

NOVEMBER 14, 2017

This financial leader could well have come through the finance org at another startup or at a larger company but they often also can come from strategy consulting (Bain, BCG or McKinsey) or through investment banking (Goldman Sachs, Morgan Stanley, etc.).

Operations 286

Operations New York City Technical Review Startup 286

David Teten

JANUARY 19, 2021

Yes, via conversion rights at a valuation cap. Yes, via conversion rights at a valuation cap. Part of the magic of revenue-based financing is how historical performance and strong, achievable financial projections are ultimately the backbone of how RBI/RBF investment decisions are made.” Flexible VC: Compensation-based.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

ithacaVC

SEPTEMBER 10, 2012

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership. Actually, I got many questions.

Dilution 53

Dilution Employee Cap Table Stock 53

Hunter Walker

AUGUST 8, 2023

At the time, this is last quarter and the stock market has trended upwards nicely since then (a potential leading indicator of private tech valuations), we all agreed venture portfolios were probably still 25-40% overvalued. Valuations. Whatever gets reported is just the tip of the iceberg. And that’s what’s happening here.

Portfolio 98

Portfolio Cap Table LP Valuation 98

www.avc.com

SEPTEMBER 22, 2011

This is NOT your 409a valuation (we call that "fair value"). This "best value" can be the valuation on the last round of financing. Whatever approach you use, it should be the value of your company that you would sell or finance your business at right now. Let's say the number is $25mm.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” Anti-dilution protection.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

ReadWriteStart

SEPTEMBER 10, 2010

I call it drip-financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn't always come along, though). In 1M/1M, our preferred financing strategy is customers. You can get cash without diluting your ownership in the company.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. Consider convertible debt Before diving into a seed round, you may want to consider convertible debt over equity financing. I speak from experience.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. Did raising money at a $500 million valuation help secure the $1 billion deal? “Impending” valuation.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316