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Quick Post on Post-Money Valuations

Rob Go

When I first started out as a VC nearly 9 years ago, most early stage company valuations were expressed as pre-money valuations. That is, the valuation of the company prior to the investment of new capital. Today, nearly all early stage term sheets I see are expressed as post-money valuations.

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The Authoritative Guide to Prorata Rights

Both Sides of the Table

These tensions seep out in some angels or seed funds publicly or semi-privately deriding later-stage VCs for their “bad” behavior. I have seen bad behavior from later-stage VCs, believe me. But I have seen equally bad behavior from super early stage investors. As always a balanced perspective is in order.

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Revisiting Paul Graham’s “High Resolution” Financing

Both Sides of the Table

This leads to the problem of “herding cats&# for entrepreneurs raising angel money. I talked about this in my social proof post where I gave some suggestions about how to get the early guys off of the fence. When I’m in, I’m in. That’s OK, but it gives you a max (read: price!) and not a min.

Finance 286
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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

How VC’s Calculate Valuation : We walked through a standard deal where you raise $1 million at a $3 million pre-money valuation leading to a $4 million post money valuation. Privately some early-stage VC’s talk about participation helping them to “juice their returns&# on smaller exits.

Valuation 405
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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

but that’s our firm’s money on your balance sheet. We want money to make some acquisitions (investors would prefer to fund M&A if they know specific deals – not to encourage bad behavior. Plus, most early-stage M&A fails so this isn’t likely a good use of capital for a young company).

Burn Rate 383
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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. I’ve been preaching the “don’t get ahead of your inherent valuation&# message for nearly 10 years.

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A Guide to Using Authority & Social Proof in Fund Raising

Both Sides of the Table

Rincon is part of the new breed of Seed Stage VCs and with the leadership of Jim Andelman has charted out the most authentic early-stage investment strategy in Southern California. Any SoCal entrepreneur raising early-stage money should put Rincon on their short list.