Gust

NOVEMBER 2, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. Dave’s valuation model first appeared in a book published by Harvard’s Howard Stevenson in the middle nineties. Add to Pre-money Valuation.

Valuation 79

Valuation Pre-Money Valuation Intellectual Property Southern California 79

Up and Running

SEPTEMBER 20, 2021

A cap table will help you in the strategic management of business decisions. For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Add pre-money valuation & calculation for it. Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

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. Many prominent LPs have also recognized the “prorata opportunity” and have set up “direct investment vehicles” themselves to take prorata stakes in their managers portfolio companies.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Up and Running

SEPTEMBER 19, 2017

Background: Justin Klemm’s analytics and website uptime startup, Ghost Inspector , wants to revolutionize the way businesses manage their ecommerce funnels. By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Both Sides of the Table

APRIL 20, 2011

They did not take salaries during the first two years and invested more money in the firm than they received from management fees. SecondRound.com – This is a proprietary CRM system that was built to help manage the fundraising process. First Round Capital’s pre-money range is usually between $3-5 million.

Pre-Money Valuation 284

Pre-Money Valuation Technical Review Cofounder Cram Down 284

SoCal CTO

SEPTEMBER 27, 2011

I've talked about this topic before in How Investors Think About Valuation of Pre-Revenue Startups. You can also take a look at StartupRoar 's topics: Startup Valuation , Pre-Money Valuation , and Early Stage Valuation. Manager or Junior Engineer 0.2 – 0.33

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

Startup Professionals Musings

NOVEMBER 26, 2012

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? Goodwill can easily account for a couple of million in valuation.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Startup Professionals Musings

SEPTEMBER 30, 2011

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? Goodwill can easily account for a couple of million in valuation.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Both Sides of the Table

SEPTEMBER 29, 2009

The other investors around the table didn’t agree nor did the “independent” board members who were willing to turn a blind eye to capital inefficiency since they didn’t have any economic interests that would be diluted by continued fund raising to support a capitally inefficient management team. The deal was done in late 2007.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

David Teten

NOVEMBER 15, 2013

Asset management also shows the traditional earmarks of an industry ripe for disruption — most obviously, unhappy customers and extremely profitable incumbents. Despite this, it’s hard to think of good examples of disruption to asset management in the classic, Clay Christensen sense.

Management 114

Management Pre-Money Valuation Venture Capital New Hampshire 114

Both Sides of the Table

FEBRUARY 25, 2010

million at a $15 million pre-money valuation. We had people hearing through the grapevine that we were about to raise money and new investors started calling us to get in on the deal. My co-founder and other management team members wanted us to hold off and see whether we could get the deal done at a higher price.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Berkonomics

JANUARY 7, 2021

How many of them, particularly in technology, were able to start a company, supply all the funding, and share no management tasks or equity with others, and still grow the company to any significant size, worthy of a multi-million-dollar opportunity to cash out at exit? Two: Co-management. Reward for early risk.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

David Teten

SEPTEMBER 16, 2014

Villalobos & Payne: “Startup Pre-Money Valuation: The Keystone to Return on Investment” 117. Wiltbank & Boeker: “Returns to Angel Investors in Groups” 3,097. approx 1999-07. 1961- 1996. Mason & Harrison: “Is it worth it?

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

Gust

NOVEMBER 18, 2012

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? Goodwill can easily account for a couple of million in valuation.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Startup Professionals Musings

SEPTEMBER 6, 2010

The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage blogs and other resources, and maybe even pay themselves a salary. How much is NewCo worth to investors at this point (pre-money valuation)? Early customers and contracts in progress add value.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

ReadWriteStart

OCTOBER 7, 2010

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. As a thumb rule, try to get enough validation so that you can get to at least a $2 million pre-money valuation before raising equity capital. HirePlug.com.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

YoungUpstarts

SEPTEMBER 4, 2017

For startup founders and CEO’s it’s also just as common to see them place too much focus on the amount of money raised, and the pre-money valuation, rather than the value that each investor can bring to the table. Entrepreneurs, business owners, senior managers at large corporations. What could be improved?

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

Both Sides of the Table

JUNE 5, 2015

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.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

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. What should the pre-money valuation be for the Series B?

Pre-Money Valuation 58

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

Hunter Walker

AUGUST 7, 2017

Since Homebrew typically leads/co-leads seed rounds, we assist in helping founders design and manage their pool against their hiring forecast. No one wants to run out of equity pool midway between financings (and larger seed rounds these days usually means more hiring pre-A)!

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Gust

SEPTEMBER 27, 2014

Make your public profile as sexy, comprehensive and enticing as possible, adding a short, well done, elevator pitch video (think “the kind of video you see on great Kickstarter campaigns”) and listing your full management team. And don’t forget the ability to customize your profile’s background.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

Agile VC

MAY 26, 2011

round which closed in November 2003, and the pre-money valuation between $10 million and $15 million. Btw, here’s our startup [link] We are bringing yield management to the restaurant industry. Still, the job of simultaneously raising money and managing a fast-growing company strains every sinew.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Lightspeed Venture Partners

OCTOBER 22, 2012

As you may have already seen , I’ve been breaking down the pitches on this season’s Shark Tank while wearing my work hat as a Managing Director at Lightspeed Venture Partners. This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.).

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Tim Keane

JANUARY 12, 2010

When companies seeking their first round of serious funding are good enough to receive a term-sheet from an investor, the first issue that always arises is valuation.   For individual angels and others investing their own money, this may be more fluid than for someone with responsibility for a managed fund.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

MAY 30, 2018

If a VC prices a flat or down round it means that management teams are often taking too much dilution. It was 20 months ago and the founder clearly told me she has made great process (code words for higher price expected) She is raising $5–7 million and knows the range of valuations for this amount.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

ithacaVC

APRIL 25, 2014

For example, cell E2 is the spot to put in the negotiated pre-money valuation. If it takes a week to show up in my inbox I assume that the management team was not well prepared to pitch in the first place. Dealing with VCs Management Startup Life' Here are things to note: 1. Ask any questions in the comments.

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

Berkonomics

DECEMBER 19, 2013

[Email readers, continue here.] Metrics and management: What might be the first indication the company will not be able to achieve its goals and objectives? When and under what conditions should the CEO and management of the company be changed? Valuation and fund-raising : How did you arrive at your proposed pre-money valuation?

Pre-Money Valuation 105

Pre-Money Valuation Liquidity Event Cofounder Valuation 105

ithacaVC

APRIL 25, 2012

If you want to scare off VCs, start your pitch with “we are looking to raise $X at a pre-money valuation of $Y” Stating how much you want to raise is fine and recommended. However, stating a desired pre-money valuation early in the process is not a good idea. Here is why.

Valuation 49

Valuation Pre-Money Valuation Liquidation Preference Preferred Stock 49

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. So co-management is the second group to share in the bounty upon a liquidity event.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

K9 Ventures

MARCH 23, 2011

However, the maturity date and the debt-nature of the note are often responsible for exerting pressure on founders that changes their focus from building value in the company, to instead “managing” the note holders and/or looking at doing a financing. Every first time founder needs to learn what it means to manage a board.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Professor VC

JANUARY 17, 2008

Again, I see nothing wrong with this, although entrepreneurs often prefer convertible debt as it defers the valuation discussion and leaves the Series A price for the venture firm to set. He also said they typically only invest at a $1 million pre-money valuation or less.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Andrew Payne

MARCH 8, 2016

From a statistical analysis of over 6,000 startups, the paper (and article) argue (roughly) that founders with board control, the CEO position, or both, can “harm the firm’s prospects, reducing pre-money valuation by up to 22%.” ” Really?

Pre-Money Valuation 40

Pre-Money Valuation Founder Valuation Startup 40

Startup Lessons Learned

JUNE 19, 2019

Wealthfront , which began as an automated investment management service and has since expanded into banking (it currently offers one of the highest interest rates on FDIC-insured cash accounts), now manages almost $15 billion in assets. He’s currently the CEO of the company. I was really focused on social good. Why does it exist?

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

ithacaVC

MARCH 11, 2016

Here goes: please do NOT think that the 409A valuation has any bearing or meaningful relationship to how a VC will value your company. Said another way, a 409A valuation is meaningless to how VCs negotiate pre-money valuations for their investments. The 409A valuation is not based in VC reality.

Pre-Money Valuation 40

Pre-Money Valuation Stock Options Valuation Later Stage 40

Feld Thoughts

JULY 14, 2015

The term sheet converts all the convertible debt into a post-money valuation of $100, essentially making the convertible debt worthless. The new money comes in at a pre-money valuation of $100, but includes a complete refresh of founder equity to 40% of the company. So they recapitalize the company.

Recapitalization 70

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

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. management, founders, angel investors) get any money. Deal with the small ownership allotted to management. Talk openly about valuation and what they’ll accept so you know what you’re dealing with.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Seeing Both Sides

JULY 15, 2009

Entrepreneurs often mistakenly focus solely on the pre-money valuation while VCs look at multiple knobs in the negotiation to drive to a set of terms that, in total, they find acceptable. The first, and most focused on, is something called the pre-money valuation. What is the promote? Life isn’t fair.”).

Pre-Money Valuation 49

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