Both Sides of the Table

JULY 22, 2010

Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. It was accept the terms or go into bankruptcy so we took the money. I had several term sheets and one of the leading term sheets had an option pool of 40% in it.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

The Startup Magazine

SEPTEMBER 12, 2019

Most startups view venture capital funding as a blessing from above — eager to take it as soon as they can get it. Tempted by large sums of money and the perceived validation that comes along with being funded, founders turn to venture capitalists to accelerate their company’s growth. Money in Exchange for Control.

Early Stage 98

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 98

Both Sides of the Table

MAY 28, 2018

There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. It goes something like this … VC: “How much money are you raising?” One entrepreneur refrain I sometimes hear is “We want to raise some extra money for M&A activities.”

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Gust

NOVEMBER 15, 2011

The Risk Factor Summation Method the fifth methodology for estimating the pre-money valuation of pre-revenue companies we have described in recent posts. Stage of the business. Sales and marketing risk. For more information on determining the average valuations in your area, see the Scorecard Method.

Valuation 102

Valuation Pre-Money Valuation Ohio Early Stage 102

Both Sides of the Table

JULY 23, 2014

We are in a bubble (with so many private $1bn+ valuations). 15 years ago we were at the peak of Internet hype with the launch of many over-capitalized businesses with a market size & opportunity was limited. The VC market has right-sized (returned back to mid 90′s levels & less competition). Where are we today?

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Both Sides of the Table

FEBRUARY 15, 2016

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Startup Professionals Musings

NOVEMBER 26, 2012

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

David Teten

SEPTEMBER 16, 2014

In 2013, 298,800 angels invested in 70,730 entrepreneurial ventures, according to the 2013 Angel Market Analysis by the Center for Venture Research at the University of New Hampshire. Source: Center for Venture Research – Angel Market Analysis Report. These companies can range from tech startups to food trucks to retail stores.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

View from Seed

SEPTEMBER 14, 2021

Will Quist did a great job of explaining this market rhetoric in this thread. The three-question framework goes as such: Q: How much tech-related market cap will be created in the next 10-20 years? So, on one hand, the market see ms like a total frenzy these days. However, I am not sure that is the case with VC.

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

Will Quist did a great job of explaining this market rhetoric in this thread. The three-question framework goes as such: Q: How much tech-related market cap will be created in the next 10-20 years? So, on one hand, the market see ms like a total frenzy these days. However, I am not sure that is the case with VC.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

ReadWriteStart

OCTOBER 7, 2010

Bottom line, early stage equity is very, very expensive. So at any point, if you are trying to raise money, and you are hearing from investors that you are too early and have too little validation, it may be a good thing. Then Liana Thompson pitched Trendy Loot , a very early stage deal site for low-end jewelry.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

SoCal CTO

FEBRUARY 2, 2011

A lot of my time is spent helping early-stage companies get to proof points so that they can raise capital. They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). Bill Payne is an expert on how early-stage investors should look at valuation.

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

Both Sides of the Table

JULY 27, 2014

We both are concerned about non-traditional capital entering the late stages and the impact that may have in the next downturn in the economy to the startups who merely trying to optimize for short-term valuation maximization. Four years ago people paid $66m median pre-money valuation and are now paying $155m.

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Startup Professionals Musings

SEPTEMBER 6, 2010

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage blogs and other resources, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? Early customers and contracts in progress add value.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Gust

JULY 23, 2014

You can find this in a number of places, but in a nutshell, I prefer to invest in highly-scalable, technology-based ventures, with a particular focus on platforms, at a very, very early stage (but, oxymoronically, where there is already some type of traction). And that’s how to get a meeting with David S.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. It’s like trying to sell a home still being built at next year’s dream market price. First priority is real revenue, customers and contracts.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Gust

NOVEMBER 18, 2012

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Agile VC

MAY 26, 2011

AGILEVC My idle thoughts on tech startups. The market size for online advertising, e-commerce, and web premium services are 1/10th to 1/3rd the size they are today. To give you a sense, for 2002 the entire US online ad market was $6B and had shrunk year over year (it was $25B+ for 2010). How to Evaluate Firms for a Seed VC.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Startup Professionals Musings

SEPTEMBER 30, 2011

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

View from Seed

OCTOBER 21, 2014

As the seed-stage startup fundraise process has received more transparency in recent years, ranging from published advice on how to raise seed capital to increased availability through AngelList, Funders Club, and various accelerator programs, I’ve noticed another trend emerging. Lower-Than-Market Value. Market Value.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

View from Seed

SEPTEMBER 14, 2021

Will Quist did a great job of explaining this market rhetoric in this thread. The three-question framework goes as such: Q: How much tech-related market cap will be created in the next 10-20 years? So, on one hand, the market see ms like a total frenzy these days. However, I am not sure that is the case with VC.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

YoungUpstarts

SEPTEMBER 4, 2017

Investing in startups is a lot more than just buying “stock” in a company. For investors who have come to the table with a history investing in publicly listed companies or the property market, it’s easy to think that backing startups is largely a “set and forget” strategy. In addition to that very few startups only raise once.

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. Bottom Up Market Sizing » January 12, 2010. Term-sheets and Valuations: Thinking about Negotiations.   Most often, investors who are interested in a company raise this issue first to measure the company’s response to a market value offer. times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

FEBRUARY 17, 2011

I’m a very big believer in the “Lean Startup&# principles as espoused by Steve Blank and Eric Ries. For many businesses you should keep your costs low & your capital raises low until you discover whether you are really on to a big idea where there is market demand. So if you can take 27% dilution for $1.5 25% dilution).

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Both Sides of the Table

MAY 30, 2018

VC firms see thousands of deals and have a refined sense of how the market is valuing deals because they get price signals across all of these deals. 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. After all?—?we

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. A combination of competition for top talent and an effort to bring employees back to the office drove startups in Israel to throw extravagant parties and all-inclusive retreats abroad.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Both Sides of the Table

SEPTEMBER 5, 2012

When convertible debt first started being introduced as a “faster, cheaper way to get startups funded” they didn’t have pricing built into them. What investor would put money into a company and then agree a price later based on success? You rarely find full ratchets in early-stage deals any more.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Gust

OCTOBER 20, 2011

Diversification across industry sectors is not as easily achieved for angels as could be accomplished in public markets, but can be achieved by co-investing with trusted angel colleagues in a broader set of businesses. Pre-money valuation varies with the economy and with the competitive environment for startup ventures within a region.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

K9 Ventures

MARCH 23, 2011

If they don’t learn to do this, then when they raise money from institutional investors and have a formal Board of Directors put in place, they are ill-equipped to know what it means to have a board meeting, to prepare a board information packet, and most of all to manage the board (and yes, every board needs to be managed).

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

This is going to be BIG.

JULY 30, 2015

You don't want the "average" fund, because average funds don't do well--just like you don't want to model the average startup, because you might as well draw a big flaming hole in the ground. I assumed the following: Seeds are done as a $1mm round on a pre-money valuation of $5mm. It's also not the "average fund".

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

Berkonomics

NOVEMBER 4, 2016

Originally created in the mid 1990’s to help with the imprecise problem of how to value early stage companies, especially those in technology, I developed what soon became known as “The Berkus Method” when published in the popular book, “Winning Angels” by Harvard’s Amis and Stevenson with my permission in 2001.

Valuation 48

Valuation North Carolina Oklahoma City Silicon Valley 48

K9 Ventures

MAY 14, 2011

In my view the terminology being used for early stage investors by the press and the media is not as clear as it should be. I’ve talked about this on several occasions when I’ve been at conference and on panels, but I figured it would make sense to do a post explaining my taxonomy of the early-stage investing world.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million. in seed money instead of $1.5M Why not raise $2.5M

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

Professor VC

FEBRUARY 12, 2015

I doubt Aileen Lee of Cowboy Ventures believed that a horse with a horn existed when she wrote Welcome To The Unicorn Club: Learning From Billion-Dollar Startups in late 2013, but she probably had no idea that it would become a hot buzzword in Silicon Valley and hit the cover of mainstream business press, Fortune Magazine.

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

www.paulgraham.com

OCTOBER 23, 2010

Want to start a startup? You need three things to create a successful startup: to start withgood people, to make something customers actually want, and to spendas little money as possible. Most startups that fail do it becausethey fail at one of these. Most startups that fail do it becausethey fail at one of these.

Startup 105

Startup Cofounder Software Stock 105

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? 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. Few startups get it quite right. Once you take money from the generalpublic youre more restricted in what you can do. [

Technical Review 76

Technical Review Startup Software Review Angel Investor 76