Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Truthfully.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

JUNE 5, 2011

So in 2011 as a startup company if you can generate lots of demand you can definitely raise an A round of capital (say $3 million) at a $7 or 8 million pre-money valuation or slightly higher whereas just two years ago you would have struggled. million post-money valuation with no revenue. That’s fine.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Gust

OCTOBER 17, 2011

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” Seat on the board.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Lightspeed Venture Partners

OCTOBER 7, 2012

As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. But the company had previously raised $5M for 17% of the company, implying a post money valuation after that investment of $29.4M. But I’d love your thoughts and comments.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

www.mint.com

MARCH 9, 2010

What is the post-money valuation of your last round? Post-money valuation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count). Check out the personal finance topic by clicking here. So easy on the eyes! All Rights Reserved.

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

Berkonomics

MARCH 28, 2019

First: Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? More importantly, VC’s will worry over several issues when looking at a company and deciding about an investment. The enlightened professional investor.

Limited Liability Company 48

Limited Liability Company Post-Money Valuation Valuation Down Round 48

Haystack

APRIL 10, 2018

with a median post-money valuation of $10.7M — these are the highest Pitchbook has recorded. OK, so microVC funds and smaller pre-seed financings could really be a thing. Um… wow. A number of companies that will go public this year and next (like Dropbox) didn’t raise obscene rounds of funding early.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

Feld Thoughts

FEBRUARY 9, 2016

I watched, participated, and suffered through every type of creative financing as companies were struggling to raise capital in this time frame. I suffered through the next financing after implementing a complex structure, or a sale of the company, or a liquidation. Your existing investors might be willing to provide it.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

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. Here is the hypo (all $$ amounts changed): 1.

Pre-Money Valuation 58

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

ithacaVC

APRIL 25, 2014

I thought it might be useful to post up a model cap table ( Cap Table Model with Waterfall ). This cap table can be used by a pre-funded startup and then a financing can be layered in. In other words, it shows both pre-money and post-money very clearly. Here are things to note: 1.

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. There were no metrics.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Warrant 153

View from Seed

SEPTEMBER 13, 2018

Effective) post-money valuation. to build sitting at a $17M post-money is going to look fundamentally different than that exactly comparable startup which took only two years and $2M total capital at a $10M post- to get there. How much time has elapsed since company founding. 100K in MRR was cited).

Seed Stage 136

Seed Stage Post-Money Valuation Valuation Startup 136

Ben's Blog

JULY 16, 2013

In June of 2000, I raised money at an $820M post-money valuation. By the end of the year and despite more than doubling bookings, I could not raise money at any price in the private markets and was forced to take the company public at a $560M post-money valuation. Things change.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Berkonomics

APRIL 6, 2012

Is the price paid for shares by previous investors excessive, creating a post-money valuation too high for the actual value of the company? More importantly, VC’s will worry over a number of issues when looking at a company and deciding about an investment.

Limited Liability Company 79

Limited Liability Company Post-Money Valuation Valuation Down Round 79

Feld Thoughts

JUNE 2, 2015

We’ve been regularly running into another problem with doing a financing after companies have raised convertible notes. Most notes are ambiguous as to whether they convert on a pre-money or a post-money basis. Mark has a superb example of how this works on his blog.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

This is going to be BIG.

MARCH 28, 2021

You go back and forth on a price and you eventually settle on a post-money valuation cap of $6.5mm, meaning you have sold about 23% of your company. The first round is $3mm with a post-money valuation of $10mm, the Series A is $9mm with a post-money valuation of $30mm and so on.

Founder 133

Founder Dilution Post-Money Valuation Valuation 133

Seeing Both Sides

JULY 15, 2009

VCs have an unfair advantage when it comes to financings. A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). In contrast, the typical venture capitalist, either individually or across their partnership, will do 5-10 financings in any given year.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

Both Sides of the Table

AUGUST 1, 2010

In these cases we proactively offer to lead their next round of financing. If we can’t agree on price I tell entrepreneurs that they can raise money and say “GRP will speak for half of the round.&# Done – the only signal is positive. Obviously this “half the round&# offer has limits.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

ithacaVC

JANUARY 24, 2013

Having a relatively small about of convertible debt on your balance sheet prior to your Series A financing is not a bad thing. In our example, if the premoney is $3mm and the Series A new investors are putting in $1mm, then they expect to own 25% of the company after the closing ($1mm invested/$4mm post money).

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

VC Adventure

NOVEMBER 14, 2012

I think this is driven both by entrepreneurs who want to take risk out of their business with more cash on the balance sheet, as well as by investors who, despite higher frothy valuations, are looking to hit certain ownership thresholds.

Balance Sheet 77

Balance Sheet Valuation Post-Money Valuation Early Stage 77

Ben's Blog

JULY 16, 2013

In June of 2000, I raised money at an $820M post-money valuation. By the end of the year and despite more than doubling bookings, I could not raise money at any price in the private markets and was forced to take the company public at a $560M post-money valuation. Things change.

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

VC Adventure

NOVEMBER 14, 2012

I think this is driven both by entrepreneurs who want to take risk out of their business with more cash on the balance sheet, as well as by investors who, despite higher frothy valuations, are looking to hit certain ownership thresholds.

Balance Sheet 48

Balance Sheet Valuation Post-Money Valuation Early Stage 48

Seeing Both Sides

JANUARY 11, 2011

If different investors have invested at very different prices, or if the entrepreneur has not made money before and this is their first shot, there can be greater tension inserted into a naturally tense situation. But the Series C investor who just invested at an $80 million post-money valuation would be bitterly disappointed.

Post-Money Valuation 40

Post-Money Valuation Dilution Cofounder Valuation 40

Professor VC

FEBRUARY 12, 2015

Former students who are readers of this blog may recall the Amazon IPO case from Entrepreneurial Finance class. It''s previous financing round was a little over a year prior to the IPO and was a $8M raise at a $60M pre-money valuation led by John Doerr of Kleiner Perkins. or a market cap of $800M. igthwghjg2q2g8hu4).

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

thestartuplawyer.com

FEBRUARY 24, 2010

About the Author Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. He obviously never launched a startup and got shafted by a co-founder. Click here to learn more about his practice.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Seeing Both Sides

NOVEMBER 30, 2008

That's because the two key assumptions regarding how much money a portfolio company would require from start to finish (the exit) have changed: (1) the length of time before exit; and (2) the number of portfolio companies that would attract outside capital to lead follow-on financing rounds.

Pre-Money Valuation 20

Pre-Money Valuation Portfolio Post-Money Valuation Valuation 20

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. So they recapitalize the company.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Agile VC

DECEMBER 6, 2012

Unlike a startup that might raise equity financing across several rounds all combined in a single balance sheet, VC’s do not simply commingle these funds into a single bucket to be allocated across all the companies in that firm’s portfolio.

LP 178

LP Balance Sheet Differentiation Limited Partner 178

Lightspeed Venture Partners

SEPTEMBER 23, 2012

post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation. The company ended up negotiating with Cuban and settled on $300k for 30% of the company, or a $1M post money valuation.

Pre-Money Valuation 158

Pre-Money Valuation Post-Money Valuation Valuation Dilution 158