Berkonomics

JANUARY 28, 2021

I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up pre-money valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road. The post Don’t get hung up on early stage valuation.

Early Stage 62

Early Stage Valuation Pre-Money Valuation Cofounder 62

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 23, 2014

pre-money valuation you certainly would want to exercise your right to continue investing if you had prorata rights. The “big boom” in startup financing started around March 2009?—?more Marc Andreessen captured some of this sentiment in his recent “ 10 Ways to Damage Your High-Growth Tech Startup ” Tweetstorm.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Startup Professionals Musings

NOVEMBER 26, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

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

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

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. First priority is real revenue, customers and contracts. Future revenue projections are not relevant at the pre-revenue stage.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

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

Both Sides of the Table

JULY 27, 2014

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. Most of those industries are fee-based and are competing on revenue growth. I don’t totally agree with that view.

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Startup Professionals Musings

SEPTEMBER 6, 2010

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Gust

NOVEMBER 18, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Startup Professionals Musings

SEPTEMBER 30, 2011

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Agile VC

MAY 26, 2011

AGILEVC My idle thoughts on tech startups. Salesforce.com is a startup with 76,000 subscribers (over 2.1M I also joke with Reid Hoffman that this was back in the days before he was “Reid” Reid’s an incredible entrepreneur, startup investor, and human being. Ok, now you have the context for early 2003.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Gust

OCTOBER 12, 2011

To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies. See the 2010 data reported here: Current Pre-money Valuations of Pre-revenue Companies.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. Term-sheets and Valuations: Thinking about Negotiations. 3]   However, if they are built bottom up, they demonstrate and make explicit a range of business model assumptions the entrepreneur is using to think about his business and its revenue model. stake in the company.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ithacaVC

MARCH 11, 2016

Here is the post, which focused mostly on how 409A valuations are used for stock option purposes. And I think that early stage companies should take the risk and not use 409A valuations. As companies move to later stages and have meaningful revenues and profits then 409A valuations begin to make more sense.

Pre-Money Valuation 40

Pre-Money Valuation Stock Options Valuation Later Stage 40

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

Gust

OCTOBER 20, 2011

In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

Gust

OCTOBER 12, 2011

Particularly when there are multiple closings taking place over a period of months, the fuse burns awfully quickly on a 12-month note given the many competing priorities of early stage entrepreneurs. Thus, it’s in everyone’s best interest to see the startup raise more capital rather than declaring default and demanding repayment.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

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

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. I don''t think early stage investors are taking enough risk.

Post-Money Valuation 60

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

Up and Running

SEPTEMBER 20, 2021

Since almost all startups do not possess traditional debt lenders, the list usually consists of data of the shareholders and the percentage they own. For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Common shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

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

Both Sides of the Table

FEBRUARY 25, 2010

million at a $15 million pre-money valuation. We had people hearing through the grapevine that we were about to raise money and new investors started calling us to get in on the deal. Had I delayed my fund raising in 99/00 by even 3-4 weeks I’m convinced I would not have raised any money at all. We hit sub 2 weeks.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

dondodge.typepad.com

JANUARY 15, 2011

Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees? Entrepreneurs face some pretty tough questions at a very early stage. Should I take Angel or VC money? How much money should I raise? How much equity should I grant to early employees?

Equity 40

Equity Employee Dilution Valuation 40

Hippoland

AUGUST 31, 2018

He has done incredibly well financially on his past two startups, and he’s now building his 3rd company. So, I thought it might make sense to take a step back and talk about all the stages of early stage fundraising here in the Silicon Valley. And companies typically have $2m-$3m revenue runrate at this point.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Hippoland

AUGUST 31, 2018

He has done incredibly well financially on his past two startups, and he’s now building his 3rd company. So, I thought it might make sense to take a step back and talk about all the stages of early stage fundraising here in the Silicon Valley. And companies typically have $2m-$3m revenue runrate at this point.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

www.currentlyobsessed.com

MAY 28, 2010

I unexpectedly found that it was more helpful to think about the company valuation as an output variable in the fund-raising equation. It hardly deserves any attention at all in the early stages. For some closing thoughts, I’ll just add that: Valuation tends to be too much of a focus for most early stage companies.

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42