Berkonomics

MARCH 21, 2019

Careful about “hockey stick” forecasts. Email readers, continue here…] Most VC’s look for a 10x opportunity – that is – a ten times increase in the valuation from investment to liquidity event. Here’s a valuation example for you based on amount to be raised. How much money can you get? .

Hockey Stick 63

Hockey Stick Liquidity Event Valuation Balance Sheet 63

Austin Startup

OCTOBER 4, 2017

Dilution, overvaluation, free money, TNSTAAFL, and how to deal with VCs like a pro. First time founders are typically the most likely to object to dilution when fundraising. They do this to avoid dilution, which on the surface seems like a good idea, but can prove deadly to your start up when you get to the A round.

Dilution 59

Dilution Valuation Equity Balance Sheet 59

Ben's Blog

AUGUST 17, 2020

When speaking with founders and private growth investors, we hear countless references to “multiples paid” on current or near-term revenue; both obsess over this because a higher multiple translates to a higher valuation. How valuation multiples work Why did multiples become a shortcut-heuristic for estimating valuations in the first place?

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

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

The Next Web

MARCH 2, 2014

This process included several rounds of financial forecasting to understand the cost of achieving where we wanted the business and brand to be, and whether we could pay for that cost ourselves. For us, because we chose to finance with debt, we gave up almost no equity in the company, and therefore almost no dilution of stock options.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

Up and Running

DECEMBER 9, 2014

What I did is I learned the art of a pro forma and the value of a pro forma which basically is a forecast. If you don’t know what your cash flow forecast is, you don’t really understand your capital needs. Just to dive into the first. Thank you Josh.

Small Business 95

Small Business Finance Forecast Metrics 95

Ben's Blog

MAY 24, 2021

Among the findings are: SPAC dilution amounts to roughly 50% of the cash ultimately delivered to the companies brought public. So, even assuming they wanted to raise the same amount of nominal dollars at the IPO as in the past, a higher valuation means they can do so by issuing many fewer shares.

SEC 36

SEC Accredited Investor IPO Technical Review 36

www.paulgraham.com

OCTOBER 23, 2010

And those who do raiseVC rounds will be able to get higher valuations when they do. Ifthe best startups get 10x higher valuations when they raise seriesA rounds, that would cut VCs returns from winners at least tenfold. [ A typical big angel round might be $600k on a convertible note witha valuation cap of $4 million premoney.

Valuation 92

Valuation Stock Partner Founder 92

Both Sides of the Table

FEBRUARY 14, 2016

Valuing any company can be difficult because it requires a degree of forecasting future growth & competition and ultimately the profits of the organization. I have been talking about my concerns about valuations for the past couple of years because, well, they’ve been rising very rapidly the past two years! Mostly, no.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

MARCH 30, 2016

If you want to see what was on my mind – I started foreshadowing change publicly in October 2015 with a forecast of what I expected in 2016 VC funding markets at a presentation I gave at the annual Cendana VC/LP conference hosted by Michael Kim. SaaS valuations had completely reverted to the mean and were now trading at 4.2x

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150