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. ValuatIon should be a function of value, not ego. Kawasaki’s Law of Pre-Money Valuation: for every full-time engineer, add $500,000; for every full-time M.B.A.,

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. That is to say, they’d want to be able to control costs and revenues at a high level. Consequently, he passed.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

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. Because this is all VCs do and if we intend to work with all of our fellow VCs and entrepreneurs when the rain ends and the sun shines again our reputations matter greatly.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. Unsurprisingly, all the sharks passed, based on market size and valuation expectations. Revenue or distribution can both be evidence that, in the Bear and the Rat’s case, the dogs literally are eating the dogfood.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

Gust

JULY 23, 2014

So, putting all that together, to get a pitch meeting with me, an entrepreneur would probably have the best result with the following strategy: Read up on the kinds of investments I make, and the kinds of opportunities I am seeking. Invested Interests Power Pitches angel investor business David Rose entrepreneur meeting pitch startup'

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Both Sides of the Table

FEBRUARY 25, 2010

A reminder that it is important for all entrepreneurs is to remember to be careful about “deal drift.” I think the perfect saying to have as a reminder is “time is the enemy of all deals,” or as my wife is all too tired of hearing me say, “Don’t pop the champagne until the ink is dry on the contract and the money is in the bank.”.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Both Sides of the Table

JUNE 22, 2011

This was an audience of mostly first-time entrepreneurs. It is great for entrepreneurs and great for VCs. So here is what I have been telling entrepreneurs privately for the past 6 months. Ah, but today’s Internet companies have real revenue! What a bubble means for each entrepreneur. I believe that.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Startup Professionals Musings

NOVEMBER 26, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

ReadWriteStart

OCTOBER 7, 2010

Before I do, however, I want to talk about a thumb rule that I'd like to propose to entrepreneurs about raising money. 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. Value Of Insight Consulting, Inc.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

Both Sides of the Table

SEPTEMBER 29, 2009

But any entrepreneurs raising capital should keep in mind that this opening of the markets could possibly be temporary. They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. I argued for literally a year to slash burn.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

FEBRUARY 15, 2016

This has led VC & entrepreneur bloggers alike to similar conclusions: start raising capital early and be careful about having too high of a burn rate because that lessens the amount of runway you have until you need more cash. I’m surprised how few entrepreneurs have this open conversation with their investors.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

This is going to be BIG.

OCTOBER 10, 2014

The criteria for what is a Seed and what is a Series A for these purposes is whether or not the first round of the company was within the same year that I did the investment, and it had to be less than $750k of prior money. Well, if you group them all up, here''s what you get: Pre-Money Valuations (M). No Revenues.

Pre-Money Valuation 146

Pre-Money Valuation Dilution Valuation Term Sheet 146

Startup Professionals Musings

SEPTEMBER 30, 2011

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Lightspeed Venture Partners

OCTOBER 7, 2012

They won a design award at a trade show, but have no revenue and no orders. This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Gust

OCTOBER 12, 2011

During the summer of 2010, I developed a workshop, A New ACEF Valuation Workshop for Angels and Entrepreneurs. 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.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. The right number to focus on is pre money valuation as that is how an investor is valuing the company before the investment. post money valuation and a $1.35M pre money valuation.

Pre-Money Valuation 163

Pre-Money Valuation Post-Money Valuation Valuation Dilution 163

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. Here’s the “what.”. And here’s the “why.”.

Early Stage 62

Early Stage Valuation Pre-Money Valuation Cofounder 62

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, playing coy, or quoting an exorbitant number. Marty Zwilling.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

YoungUpstarts

SEPTEMBER 15, 2018

The pre-money valuation of other startups is based on the following factors. It is important for businesses to be duly evaluated because it’s the valuation of businesses that actually go on to draw investors. In a way, putting a value on their businesses helps entrepreneurs to generate liquidity.

Pre-Money Valuation 124

Pre-Money Valuation Valuation Sweat Equity Startup 124

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

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

Both Sides of the Table

JULY 27, 2014

Most of those industries are fee-based and are competing on revenue growth. Four years ago people paid $66m median pre-money valuation and are now paying $155m. While this is temporarily a good thing for entrepreneurs it will turn sour when we go through the next inevitable downturn.

Valuation 309

Valuation Pre-Money Valuation Later Stage Non-Compete 309

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ithacaVC

JANUARY 14, 2014

I was giving some advice the other day on how to approach Series B investors in terms of valuation. Company X raised its Series A at a pre-money valuation of $5mm and it raised $4mm dollars. So the post-money valuation after the Series A was $9mm. It has just started to generate revenue.

Pre-Money Valuation 58

Pre-Money Valuation Post-Money Valuation Valuation Term Sheet 58

Agile VC

MAY 26, 2011

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. round which closed in November 2003, and the pre-money valuation between $10 million and $15 million. It was a pretty good valuation for the time.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Lightspeed Venture Partners

OCTOBER 22, 2012

The company has gotten off to a fast start, $150k in revenue in the first two months, with all the marketing coming from social media. This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). In 2010 they did $10k in profits.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Hippoland

AUGUST 31, 2018

A few months ago, I was talking with a friend of mine who is a successful serial entrepreneur. And companies typically have $2m-$3m revenue runrate at this point. And if you do the math of VCs buying roughly 20% of a startup, valuations can be upwards in the $50m+ range for today’s series A rounds! This was surprising to me.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Lightspeed Venture Partners

OCTOBER 1, 2012

pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. Price is always a consideration in investing, but particularly so if the entrepreneurs have shown an interest in an early exit. The entrepreneur took this offer.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Berkonomics

DECEMBER 19, 2013

In the process of raising funds to create and develop a business, entrepreneurs make many statements to those they seek to attract as investors. Revenue projections: What will happen to the company if the revenues and earnings projected on a worst case basis are not achieved as predicted? By: Arthur Lipper.

Pre-Money Valuation 105

Pre-Money Valuation Liquidity Event Cofounder Valuation 105

The Startup Magazine

SEPTEMBER 12, 2019

Realistically, VCs expect 90% of their ventures to fail, but entrepreneurs expect 100% of their ventures to succeed. Venture funding isn’t real validation – market traction and continued profitability and revenues are. The expectations are fundamentally misaligned. This approach is not possible when venture funded. .

Early Stage 85

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 85

BeyondVC

APRIL 12, 2005

Combine this relative value with the fact that many tech companies, particularly large software companies, derive 50-70% of their revenue from annual recurring maintenance and you have an opportunity to buy out many of these businesses due to their predictable cash flow.

LBO 60

LBO Pre-Money Valuation Technical Review Software Review 60

Hippoland

AUGUST 31, 2018

A few months ago, I was talking with a friend of mine who is a successful serial entrepreneur. And companies typically have $2m-$3m revenue runrate at this point. And if you do the math of VCs buying roughly 20% of a startup, valuations can be upwards in the $50m+ range for today’s series A rounds! This was surprising to me.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

Berkonomics

NOVEMBER 4, 2016

There is a universal truth: fewer than one in a thousand start-ups meet or exceed their projected revenues in the periods planned. So how do you use financial projections as valuation metrics when you know the odds of those being accurate predictors of the future are so very unreliable?

Valuation 48

Valuation North Carolina Oklahoma City Silicon Valley 48

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I learned all of this myself on your side of the table raising money at my first company. The list goes on. Legacy deals have “hair.&#. But pass they will.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Business Plan Blog

DECEMBER 26, 2013

The entrepreneur will need to be ready and able to respond to due diligence information requests. This process may include the provision of various scenarios on revenues and costs as the investors validate forecasts initially presented. Pre-money valuation. Amount to be invested. Type of security and structure.

Angel Investor 51

Angel Investor Due Diligence Pre-Money Valuation Angel Groups 51

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) was spun out, and the valuation was set by that financing round.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

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. Entrepreneurs generally prefer #2, provided it’s at a valuation that wouldn’t be absurdly dilutive given the amount of notes outstanding.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107