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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? One of the most common issues that concern entrepreneurs is how to address the "Valuation Question." How do we best approach the question of valuation?

Every Startup Needs Intellectual Property To Thrive

Startup Professionals Musings

When someone says Intellectual Property (IP), most entrepreneurs think only of patents. In reality, patents are only one of at least eight items that should be in your IP portfolio. intellectual property IP patent portfolio

IP 101 for Startups

StartupCFO

Last week I spoke with Sunny Handa from law firm Blakes and some accounting and valuation experts from accounting firm BDO on intellectual property for startups. We covered legal, valuation, accounting and practical aspects. On a related note, Miltons has just released a free book on IP for Canadian companies here. IP 101 for Startups – Tags: Management law

Legal Checklist for Startups

Scott Edward Walker

Button-down IP ownership and assignment issues (see post here ). Don’t issue stock options unless a proper option plan is in place and a valuation has been done in compliance with Section 409A of the Internal Revenue Code (see post here ).

Startup Blog: Think Ahead When You are Negotiating IP Rights

Taffy Williams

Tuesday, May 3, 2011 Think Ahead When You are Negotiating IP Rights In the last few weeks, I was having discussions with a group starting a company in the healthcare field. Valuation of a diagnostic company is likely to be lower than for a therapeutic company in the same healthcare field.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

In the old days VCs funded off of a “pre-money” valuation. If you add the pre-money valuation (let’s say $8 million) to the amount of money you’re raising (let’s say $2 million) you get the post-money valuation. So deals were either “one handed” (one VC) or “two handed” (two VCs) and were discussed as “$5 on $20″ which meant $5 million on a $20 million pre-money valuation.

Selling a Line of Business

OnlyOnce

If you are selling assets, you need to clearly define what they are, and what they aren’t, and you need to make sure all legal details (contracts, IP, etc.) In terms of valuation expectations, don’t expect to get any credit for synergies. Business Entrepreneurship Authentic Response core culture divestiture financials Inc.Magazine non-core Occipital Postmaster Direct Q Interactive Red Laser spin-out synergies valuationSelling a Line of Business.

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Corporate Acquisitions of Startups: Why Do They Fail?

Steve Blank

VCs like acquisitions as much as IPOs because the acquiring companies often can rationalize paying large multiples over the current valuation of the startup. However, these nosebleed valuations make it even more important in getting the acquired company integrated correctly.

The risks of being a small investor in a private company

Chris Dixon

2) Issuing of massive option grant to management along with new financing at a below-market valuation. Company is doing well and is offered a Series B at a significantly higher valuation. Instead, large investor invests $5m at below-market valuation, getting 40% of the company, and simultaneously issues options worth 50% of the company to management. Small investors invest in entity 1 that licenses IP from entity 2.

Taking Corporate VC: When It Makes Sense

View from Seed

These corporate VC activities go hand in hand with other strategies of large companies including internal R&D, IP licensing, M&A, etc. . In recent years we’ve seen more and more corporations become more active or establish strategic VC arms.

8 Intellectual Property Items Every Startup Needs

Startup Professionals Musings

When someone says Intellectual Property (IP), most entrepreneurs think only of patents. In reality, patents are only one of at least eight items that should be in your IP portfolio.

Bad Notes on Venture Capital

Both Sides of the Table

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. People seem concerned about valuation. Why don’t they set a valuation then? This week.

Channel your Inner VC to Understand Startup Valuations

www.currentlyobsessed.com

Valuation is an important aspect of VC deal terms, and a major determinant of your ultimate outcome. I unexpectedly found that it was more helpful to think about the company valuation as an output variable in the fund-raising equation.

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

So money spent should add equity value or create IP that eventually will. Valuation. I wanted to call out special attention to valuation in this debate. Simply put – down rounds are very hard to achieve psychologically because insiders fight against them (rightly or wrongly) and outsiders have a mental gap that if your valuation is going down your company is forked up and they often just pass. If you’re raised at $250 million+ valuation even more cautious.

Social Media Accounts are Intellectual Property

Startup Professionals Musings

When someone says Intellectual Property (IP), most entrepreneurs think only of patents. In reality, patents are only one of at least eight items that should be in your IP portfolio.

Six Reasons Not to Invest in a Venture Capital Fund

This is going to be BIG.

On paper valuations are kind of meaningless. Just because the next biggest fool pays X for preferred shares, creating an implicit valuation for all the shares, doesn't mean you can either get out of it at that price or that you can be sure of the exit price. When you back a founding team and their first product hits a wall, there's not usually any IP that is worth anything to anyone.

How to Make Sure Professional Services Don’t Take Over Your Software Company

Both Sides of the Table

Importantly, make sure that you retain IP rights to your custom work which needs to be part of the engagement contract. At a minimum co-ownership of the IP. If not specified in contract you might find yourself with future litigation over IP.

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What Should You Do with Your Crappy Little Services Business?

Both Sides of the Table

You own the IP you create. If you build a true “technology services for services sake&# business at some point you’ll likely build technology products as part of your projects where you either own the IP or you own in jointly with your customer or business partner.

Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.   You can vary both valuation and term-sheet assumptions (in the gray boxes) to assess the impact on the values of the business.

Top 120 Startup Posts for 2010

SoCal CTO

IP Law for Startups , June 23, 2010 Groupon’s Growth Made Possible by Facebook - Leveraging Ideas , May 5, 2010 Automating Themed Logo Changes by Season - TylerCruz.com: An Internet Entrepreneur's Journey , October 18, 2010 Selling a Business - A Guide for Investors and Entrepreneurs - Angel Blog , February 28, 2010 Minimum Viable Product in practice - Guy Nirpaz , October 17, 2010 Want to Know How VC’s Calculate Valuation Differently from Founders?

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The Top 4 Items You Need Documented When Selling Your Website Through a Broker

Blogtrepreneur | Entrepreneur Blog

Firstly, the website broker will review the data in order complete an accurate assessment and valuation of the business. An established brand can have a significant bearing on getting a better market valuation as well.

Ten Principles Which Spell Continuous Innovation

Startup Professionals Musings

Longer-term, enhanced product value begets superior company valuation through your organization’s intellectual property (IP) portfolio. Continuous innovation is required to survive in all businesses, beginning with your startup, and increasing in importance as your business matures.

10 Concrete Steps to Assure Business Innovation

Startup Professionals Musings

Longer-term, enhanced product value begets superior company valuation through your organization’s intellectual property (IP) portfolio. Continuous innovation is required to survive in all businesses, beginning with a startup, and increasing in importance as your business matures.

Most Common Early Start-up Mistakes

Both Sides of the Table

To the best of my knowledge US law allows you to work on your own resources and in your own hours and let you personally own your IP. In some countries outside the US (the UK for example) employers can specify in an employment contract that ANY IP you develop while you’re employed by that company is owned by them. Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital.

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Read My Lips: We Are Not Walking Away from WebOS

Venture Chronicles

First the tech pundits, who are centering on the IP is the main asset argument. So we’ll discount it by half and using Google per-per-patent benchmark of $550k per patent we arrive at a valuation of $467m, which is really dependent upon there being some competitive bidding for the assets otherwise it’s a complete fire sale. Today comes news leaked from an internal HP all hands meeting that the company is not abandoning WebOS, 15 months after acquiring it for $1.2

IP 18

Tune In, Turn On, Drop Out – The Startup Genome Project

Steve Blank

However, this does not mean that investors don’t have a significant effect on valuations and M&A). Founders overestimate the value of IP before product market fit by 255%. . In April 2010 I received an email that said, “I’m an incoming Stanford student in the fall and working on a project that a number of people suggested I get in touch with you about.&#. Ok, I get a lot of these. Is this some grad student or post doc who wanted to do some independent study?

14 Interesting Findings From The Startup Genome Project

YoungUpstarts

However, this does not mean that investors don’t have a significant effect on valuations and M&A). Founders overestimate the value of IP before product market fit by 255%.

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When Does Zynga Become a Value Stock?

Agile VC

IP Litigation – EA is suing Zynga for copyright infringement , and regardless of the merits this is a headache Zynga will have to deal with and pay to defend itself. Draw something… other than this painful chart. Zynga’s faced a lot of pressure in the public markets recently.

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The Company Milestones Angel Investors Care About

Business Plan Blog

A major piece of the business plan will be your capitalization strategy demonstrating the milestone timeline discussed above as well as the effects of accomplished milestones on the company’s future valuation. The Milestones Angel Investors Care About.

Understand the tricks Multinationals use to avoid paying tax

Start Up Blog

This is not done to save on production costs, but to justify the location of IP assets in these low tax regimes. The government makes the valuation, and sets the rate payable. It’s time to get real on Multinational Tax avoidance.

Startup Resources

www.vccafe.com

IP Location Tools. Seed Stage Valuation Guide. Lodestone Innovation Partners (IP) Ltd are spin-out specialists. “My IP” – produced by the UK Intellectual Property Office. About VC Cafe. Contact. Startup Resources (Updated Mar 2013).

The Legal Side of Entrepreneurship

YoungUpstarts

“And if you have a valuation cap; a higher cap is always better than a lower cap.” The primary terms for these types of transactions are the valuation cap and the conversion discount. by John Vrionis, partner at Lightspeed Venture Partners.

Startup Blog: Need Investment? Increase the Chances by Beefing Up.

Taffy Williams

Also, do the best you can on your limited budget to shore up the IP situation. Be prepared to show or discuss the valuation inflection points relative to your projected spend. Every day the product is off the market is a day of lost sales while your IP is still protecting it.

CXL Live 2017 Recap: Optimization & Growth Insights from 20+ Experts

ConversionXL

The CEO doesn’t care about his website, he cares about his valuation (i.e. Sell CRO by calculating the valuation increase. Valuation increase? IP lookup. Score B2B marketing campaigns in minutes by joining IP detection and company scoring.

Startup Blog: Decisions, Decisions, Decisions ? Second Guessing

Taffy Williams

It is always easy to decide to switch when you believe you will increase the valuation of your business. Think Ahead When You are Negotiating IP Rights A Few Great Links to Startup Articles ► April (11) Beyond Rumsfeld by (Stephen A.

Preparing For An Acquisition

YoungUpstarts

When using others (employees, contractors, third parties) to develop your technology, be sure that ownership of IP is assigned to the company. If questions arise as to the propriety of ownership of IP, your valuation could be negatively affected or the deal scuttled altogether.

Best Way to Protect Your Brilliant Ideas

Inc Startups

This time I talked to Alexander Poltorak , founder and CEO of General Patent Corporation , an intellectual property firm that focuses on IP strategy, valuation, licensing, and enforcement. If I think someone is infringing on my IP, is there value to sending cease-and-desist letters?

Guest Post from HBS Professor: The Nuances of Marketplaces

the vc in me

Example: starting in 2005 a lot of entrepreneurs and investors were bullish about market exchanges for IP (e.g. But I always thought it would be impossible to get MSPs for IP to scale given the lack of valuation transparency and lack of transaction standards (not to mention huge litigation risks). Today, all of these attempts to create eBays or Craigslists or Yelps or Sotheby’s for IP have either been shut down or are functioning at puny scales. the vc in me. Welcome!

Week In Review – Aug 22 – Aug 28, 2010

Active Garage

As organizations – and their customers – increasingly rely on database, server, and IP-connected applications and data sources, the importance and responsibility of maintaining continuity of the business infrastructure and limiting costly downtime in the event of a disaster, is paramount. In a previous post, Business Valuation in Divorce is Different, Steve discussed why Investment Value is more appropriate in the context of family law.

Startup Blog: Tips on getting a partnership for your early drug.

Taffy Williams

For several years, she has been providing companies help in identification, evaluation, valuation, negotiation and strategy for partnering in or out. Think Ahead When You are Negotiating IP Rights A Few Great Links to Startup Articles ► April (11) Beyond Rumsfeld by (Stephen A.