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.

Valuation 151

Valuation Marketing Venture Capital 151

VC Cafe

FEBRUARY 27, 2023

Most founders reported (in several different surveys) that knowledge and belief in their industry/sector and personal connection is one of the key reasons they would choose one investor over another. See the recent reports by Frontline Ventures and Creandum on what makes founders choose one offer over another.

Venture Capital 215

Venture Capital Technical Review LP Institutional Investors 215

Both Sides of the Table

MAY 30, 2018

I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you. What was the post money on your last round (and how much capital have you raised)? VCs hate “down rounds” and many don’t even like “flat rounds.”

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. Valuation. I wanted to call out special attention to valuation in this debate.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

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’ve decided to take all of my private conversations and subjective points-of-view on the topic and make them public in a keynote speech at the Founder Showcase in San Francisco on June 15th. That’s stupid.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Feld Thoughts

FEBRUARY 9, 2016

I have two simple rules for founders in my head from this experience. This is a little tricky in early rounds and with modest up-round financings, as you’ll often have a liquidation preference that is high relative to your overall valuation. But, as you raise more money at higher valuations, this will normalize.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

ReadWriteStart

JUNE 1, 2020

I have interacted with a lot of founders who funded their initial business expenses through credit cards. The bridge or exit stage is generally of very large transactions and for companies with substantial valuation. Point number 3: Never raise money with an increased valuation. Bridge or exit stage. It has to be the right fit.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

VC Cafe

JANUARY 2, 2023

There are 85 Israeli unicorns, but only about 50% them justify a billion Dollar valuation, according to Viola’s report. As growth investments (and valuations) go down, unicorns might struggle to survive, according to Globes. Large LPs are signalling the need to slow down, and funds realise it may take longer to fundraise.

Valuation 158

Valuation Down Round Venture Capital 158

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Both Sides of the Table

JUNE 22, 2011

I recently spoke at the Founder Showcase at the request of Adeo Ressi. I said that at the Founder Showcase, too. In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. This post originally ran on TechCrunch.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

VC Cafe

JANUARY 29, 2024

That’s the case for most companies that are already in the market, especially if they raised funding at imaginary valuations before. Dealroom global tech report ( source ) As a result, 2023 has also seen a 43% decline in mega rounds of over $100M, though they still exist. In many ways, Edward is right.

Generative AI 171

Generative AI Global Venture Capital Valuation 171

VC Cafe

NOVEMBER 30, 2022

The 2022 Founders Factories report by DealRoom and Accel shines a spotlight on the startup clusters that produced most unicorns across Europe and Israel, and then tracks the alumni of those unicorns to test where the talent goes to found their next companies. London and Tel Aviv are home to the most founder nurturing unicorn startups.

Europe 97

Europe Balance Sheet Valuation 97

VC Cafe

MAY 29, 2022

Sequoia’s “Adapting to Endure” Sequoia presented this deck to a group of portfolio founders and it quickly spread online to founders worldwide. Investing at this stage is primarily focused on founders, market tailwinds, and underlying product/strategy (in that order). Source: VentureUnlocked newsletter.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

VC Cafe

MAY 18, 2022

It's not "cheap" because it is down 70%. 2) Valuation multiples are always a hack proxy. Down rounds are coming. Advice for startup founders (consolidated). CEOs and founders need to look this harsh reality square in the eyes and start planning to ensure survival today. Dangerous to use.

Term Sheet 190

Term Sheet Startup Valuation Ukraine 190

ithacaVC

NOVEMBER 14, 2014

I have written about startup valuations previously. If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. A founder is about to raise their first round and asking me how to value their company. [1]. Month on month (MoM) growth.

Valuation 69

Valuation Startup Down Round Early Stage 69

Lightspeed Venture Partners

OCTOBER 7, 2012

The founders were very sympathetic; a man, laid off from his job, and his very pregnant wife, who sold their house and investing $150k into the business and are working hard to make a go of it. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Better yet, the valuation of your enterprise is often higher than if the same investment were taken from a professional investor.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Myth #3: Take the Highest Valuation You Can Get. Valuation is a touchy subject for most entrepreneurs. They seem to take it personally when an investor isn’t willing to negotiate on valuation.

Finance 205

Finance Silicon Valley Valuation Startup 205

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. Restructures, Down Rounds, and Pay to Plays.

Portfolio 98

Portfolio Cap Table LP Valuation 98

Both Sides of the Table

SEPTEMBER 18, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. How do you think they’ll feel if your next round is at a $50 million post money valuation and their hard-earned $25,000 is worth 0.05% of your company? People seem concerned about valuation.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Bryce Dot VC

APRIL 19, 2016

As we hunted for those overlooked gems or misunderstood breakthrough ideas a common theme emerged among the founders stuck in the Series A gap. Most had structured their seed rounds as bridge notes (a fancy term for a loan) that would convert to equity when the anticipated future round of funding closed.

Valuation 40

Valuation Down Round Equity Conversion 40

Berkonomics

OCTOBER 18, 2018

For investors, a subsequent down round at a lower valuation than the last, or an exit opportunity at a loss are all opportunities for the affected stakeholder to show a side that can sometimes shock an entrepreneur or CEO. That one hurts early investors and founders more than perhaps any other action by investors.

Valuation 96

Valuation Dilution Down Round Employee 96

View from Seed

FEBRUARY 19, 2015

This is a guest post from Rob May , a co-founder and CEO of Backupify , which raised $19.5M Hang out with other founders and CEOs. Other CEOs are the only people you can sit down and talk with about the hardest parts of your job. It’s nice to get great valuations and hire A-players. and sold to Datto in late 2014.

Founder 120

Founder Startup Cofounder Business Model 120

Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. Outline multiple tranches. Anti-dilution protection.

Term Sheet 223

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

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. How to pump up your VC valuation. If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Both Sides of the Table

FEBRUARY 4, 2016

They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system. Median pre-money valuations skyrocketed – shooting up 3x in just three years as investors competed to christen imaginary animals with imaginary valuations. So what happened?

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Gust

SEPTEMBER 17, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. Outline multiple tranches. Anti-dilution protection.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

The Equity Kicker

MARCH 24, 2015

Everyone loves a high valuation and it’s natural for founders to want to minimise dilution. They will most probably go on to raise multiple rounds of venture capital after all. The biggest problem comes from chasing high valuations. But I’ll say it again: trying to get really high valuations is a mistake.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

www.paulgraham.com

APRIL 28, 2010

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. Few startups get it quite right.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Feld Thoughts

APRIL 21, 2016

. “Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees.

Marketing 70

Marketing Down Round Startup IRR 70

ithacaVC

FEBRUARY 1, 2018

Founders often raise money from friends and family and other angels. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. And sometimes founders want to protect the financial interests of FFAs. causing valuation bumps.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

Ben's Blog

JULY 16, 2013

You probably thought that valuations would be roughly the same as they were the last time you raised money. And those are big companies with real earnings, so you can imagine how a private company’s valuation might fluctuate. In June of 2000, I raised money at an $820M post-money valuation. Yes, we did a down round.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Gust

OCTOBER 17, 2011

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. Outline multiple tranches. Anti-dilution protection.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. than comparable companies in the same sector that raised at a higher valuation. Why, yes, they are.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Berkonomics

MARCH 28, 2019

First: Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? No one wants to face this, but the need for money and the possible overpricing of the first rounds may have created an unsustainable valuation.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Better yet, the valuation of your enterprise is often higher than if the same investment were taken from a professional investor.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106