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When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

Or, in the case of a convertible note, they’ll explicitly state a valuation cap. Lower-Than-Market Value. Market Value. ”).

10 Rules of Thumb for Startup Investment Valuation

Gust

How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

5 Ways To Radically Improve Your Company Valuation

YFS Magazine

For business owners, startup valuation is a topic that causes lots of angst, raises tons of questions and definitely gets emotions blazing.

Startup Valuation: How Much Is Your Company Worth?

Seed Stage Capital

skip to main | skip to sidebar 19 January 2010 Startup Valuation: How Much Is Your Company Worth? They dazzle. It is analogous to a make-vs.-buy

10 Rules of Thumb for Startup Investment Valuation

Startup Professionals Musings

How much is NewCo worth to investors at this point (pre-money valuation)? NewCo might be able to pick up an initial $50K valuation on this item.

Convertible Debt: Worst Form Of Seed Financing — Except For All The Others

Gust

How to finance a new seed-stage startup? A convertible note financing is not a loan in the conventional sense. Equity? Convertible debt?

Making Sense of the Stock Market Drops in Relation to Venture Financing

Both Sides of the Table

So why invest in that period of uncertainty unless it’s early-stage and thus valuation matters less. It was a nerve racking morning.

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Age of companies when they achieve $1bn valuations

The Equity Kicker

That said, I think that froth in the late stage financing market has contributed in the last couple of years. Startup general interest

Sizing Option Pools In Connection With Financings

A VC : Venture Capital and Technology

Investors like to require that an unissued option pool is in the pre-money valuation calculation when they put money into early stage companies. Then we'll do the same thing at the time of the next financing. And the investors want the option pool to be in the pre-money valuation. Hopefully it will explain the issue.

Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

US startup valuations reach ten year highs

The Equity Kicker

Venturebeat reported yesterday that US startup valuations have reached ten year highs. Venture Capital

Website Valuation Methods

Blogtrepreneur | Entrepreneur Blog

Website Valuation: How to determine Website Value. Regardless of whether you’re a buyer or seller, trying to work out how to do website valuation is a tricky business. What I will say is that the first and most straightforward way to value any kind of website is to find out how the market as a whole determines a website’s valuation.

Notes on raising seed financing

Chris Dixon

I’ve written ad nauseum on this blog (see contents page) about venture financing so hadn’t planned to blog more on the topic. VCs can be less valuation sensitive and have deep pockets but are sometimes buying options so come with some risks ( more ). I sketched some notes for the class which I’m posting below.

Investors Beware: Today’s $100M+ Late-stage Private Rounds Are Very Different from an IPO

abovethecrowd.com

An unprecedented 80 private companies have raised financings at valuations over $1B in the last few years. Consider the case of Fab.com.

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Convertible Note Seed Financings: Founders Beware!

Scott Edward Walker

This post is the third part of a three-part primer on convertible note seed financings. This part will address certain tricky issues.

Should Investors in the Same Round of Financing Ever Get Different Prices?

Both Sides of the Table

We plan to raise at a $5 million pre-money valuation. And a few others. I recently wrote about my views that startups rounds should be priced.

Startup Valuations – Again….

ithacaVC

I have written about startup valuations previously. If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. There’s a reason it’s so difficult to figure out – valuations have little basis in reality for early stage companies. Thanks!

Knowledge Is Power: Convertible Note Financing Terms, Part I

Gust

It should therefore come as no surprise that an asymmetry of information exists, mostly gleaned from experience, between founders and investors in a venture financing deal. A term sheet for a convertible note deal may run two or three pages, versus 8-10 pages for a typical Series A Preferred Stock financing. (I’ve Knowledge is power.

The "Real Valuation" Is About Having Fun

Fresh Inc.: The Staff Blog

Ronen Shilo, founder of software company Conduit, talks about what his company's recent $1 billion valuations means--and doesn't mean--to him.

Convertible Debt – Valuation Caps

Ask The VC

Today, in our series on convertible debt, we examine the conversion valuation cap. The valuation cap is typically only seen in seed rounds where the investors are concerned that the next round of financing will be at a price that is at a valuation that wouldn’t reward them appropriately for taking a risk by investing early in the seed round.

The "Vig" Working Its Way into VC Financings

Allen's Blog

This post in Techcrunch raises interesting issues around what seems to be a trend in VC financings for "lead" investors to get a better deal than "follower investors" in the same round. the due diligence, negotiating the term sheet, determining the appropriate valuation, assigning a partner to sit on the board, etc.)

The Trap of Relative Value

Feld Thoughts

He’d gotten a random note asking about his valuation when we invested relative to another financing that was just announced. The other company, which was much smaller at the point of investment, got an 11x ARR valuation. My response to the specific situation was: Valuations have increased on a relative basis.

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When In Doubt on Pre-Money Valuation, Smart Guys Procrastinate

Recent Buzzes - VC Experts, Inc.

If there simply is no way to get a handle on the pre-money valuation in an angel round, the trick is to postpone the valuation/pricing decision until a future event. Typically this event is the first professional (some times called the Series A) round of financing, when the company is more mature.

The Valuation Trap

Fresh Inc.: The Staff Blog

The combination of sky high valuations, equally high burn rates, and a disappearing IPO market is not a pleasant one. I am fairly confident that both Square and Box can and will navigate the valuation trap, but it will require making some hard choices in the coming months. I don''t like to pay sky high valuations.

Raising Financing: Convertible Debt vs. Equity

Instigator Blog

Seth Levine from Foundry Group touched off a debate on which is the best way to raise startup financing: convertible debt or equity. So in the Series A, when you now want to raise $2M and the pre-money valuation is $6M, the $500k is measured against a pre-money valuation of $4.8M. All prominent and successful investors.

5 Reasons Startups Need Revenue As Well As Users

Startup Professionals Musings

Should they focus on increasing revenues and profitability, or entice more and more users with “free” services, to increase their valuation.

How to Fine-tune Your Small Business Finances—from Funding to Growth [Webinar Recap]

Up and Running

I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth. John K.

7 Lessons On How To Avoid A Quick Business Failure

Startup Professionals Musings

They only see and remember the recent new entrants in the billion dollar valuation club, including Uber, Airbnb, and Snapchat.

Some thoughts on when to raise money, and the current financing environment

Chris Dixon

Here are some thoughts on this question generally along with some thoughts on today’s venture financing market. - Venture valuations have swung by roughly a factor of 4 over the last decade. Prior to the Facebook IPO, the consensus seemed to be that private valuations were near the top of the cycle. startups

Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

Last week , we gave some attention to the “why” behind convertible note financing for early stage startups. As with so many subjects in law and finance, mastering the jargon is half the battle. This may seem like a no-brainer now that you understand the basic structure of a convertible debt financing.

How do the sample Series Seed financing documents differ from typical Series A financing documents?

Startup Company Lawyer

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K). Silent.

Early Seed Financing Terms Endure… Whether We Like It or Not

Genuine VC

Dharmesh Shah had a great post up last week about the lessons learned from raising a mezzanine round of financing. But the more meaningful reason that early financing terms endure into future rounds is that negotiation away from terms already in place are just that – negotiation. In contrast, valuation always has room to move up.

Convertible Debt, Priced Equity Rounds and Deal Timing

Gust

An impromptu Twitter debate arose among Fred Wilson, Dave McClure, Mark Suster, Chris Dixon and others about convertible debt, priced equity rounds, and the nuances of early stage financing. It was such a good discussion that Fred asked that someone Storify it.

Wegner: If You Need To Raise Money, Get Your Financing Done ASAP

Ask The VC

Albert Wegner (Union Square Ventures) has today’s VC Post of the day titled If You Need To Raise Money, Get Your Financing Done ASAP. In it, Albert expresses his belief that given the current macro economic environment, companies should focus on getting their money raised quickly – as in right now.

Cash is King: 8 tips for Optimizing your Startup Financing Strategy

For Entrepreneurs

Getting Funded avoid down round Startup fundraising startup valuationIntroduction This post aims to help startup CEOs optimize their funding strategy by examining how investors value startups, and explaining how to avoid the common cash management pitfalls.

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Worked Up about Unrealistic Venture Capital Valuation

Growthink Blog

So, Mike tells me he wants to raise a first round of venture capital based on a $100 million valuation. Getting a $100 Million valuation is impossible for a startup. In fact, getting above a $10 Million valuation is also virtually impossible unless you have at least some traction (e.g., So it's worth posting. Maybe $5 million.

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How Can This Be A Billion Dollar Company?

Feld Thoughts

Financing Entrepreneurship fundraising unicorn VC I came across one from Nic Brisbourne (Forward Ventures) titled I’m a stock picker.

Facebook, Twitter, & startup valuations - The best properties always look too expensive

Don Dodge on The Next Big Thing

The experts thought Microsoft was crazy when they invested $240M in Facebook at a $15B valuation. Digital Sky Technologies invested $200M in Facebook in May of 2010 at a $10B valuation. Just 7 months later Goldman Sachs is investing $500M at a $50B valuation. Market valuations are asymmetric. Crazy like a fox.

Founders – Use Your Down Round To Clean Up Your Cap Table

Feld Thoughts

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. Venture Capital cap table down round Financing VC

What Didn’t Happen

A VC : Venture Capital and Technology

to 5x revenues, a far cry from what companies get financed at in the late stage private markets. That did not happen. But it will.

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