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Valuations 101: The Venture Capital Method

Gust

It is one of the useful methods for establishing the pre-money valuation of pre-revenue startup ventures. The concept is simply…since: Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in Then: Post-money Valuation = Terminal Value ÷ Anticipated ROI. million.

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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

In a world where the economy only heads in one direction (read: 2009-2014) most investors & entrepreneurs forget to pay attention to gross burn. Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service.

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NextView’s Greatest Hits

View from Seed

But mainly we did it because these corporate VCs were among the only groups willing to invest at PayPal’s somewhat inflated post-money valuation, during the middle of the dot-com crash when traditional VCs pulled back sharply and other sources of funding were constrained.” Where does the money really go in retail?

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Shark Tank Season 4 week 4 breakdown

Lightspeed Venture Partners

The company has done $400k in sales in less than two years and had an early test deal with a local supermarket chain that they were massively overperforming on. He had been at it for 6 months and had no sales or distribution lined up yet. In this way, they remind me of the Lifter Hamper entrepreneur. Fair enough too.

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

Both Sides of the Table

And for some strange reason entrepreneurs didn’t share this information. Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. I’ve started from day one trying to build total transparency into my process with entrepreneurs.

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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

I wrote this because over the last decade I’ve seen a destructive cycle where otherwise interesting companies have been screwed by raising too much money at too high of prices and gotten caught in a trap when the markets correct and they got ahead of themselves. Again, prices are expressed as pre-money valuations.

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A Guide to Using Authority & Social Proof in Fund Raising

Both Sides of the Table

Any SoCal entrepreneur raising early-stage money should put Rincon on their short list. He covers this is the first 15 minutes or so of the video and he’s awesome to listen to (more than 25,000 people have listend to this video so far – mostly entrepreneurs ;-)).