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What Does the Post Crash VC Market Look Like?

Both Sides of the Table

We drew this conclusion after a meeting we had with Morgan Stanley where they showed us historical 15 & 20 year valuation trends and we all discussed what we thought this meant. Should SaaS companies trade at a 24x Enterprise Value (EV) to Next Twelve Month (NTM) Revenue multiple as they did in November 2021?

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Valuation Methods 101

Gust

Detailed descriptions will be published over the next few weeks: The Scorecard Method: This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target. The Venture Capital Method.

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Why Startups Should Raise Money at the Top End of Normal

Both Sides of the Table

But to help with the explanation I’d like to put down some markers of typical Internet pre-money valuations done in major US markets (San Fran, NY, LA, etc.) while acknowledging that San Fran deals are often higher valuations due to increased competition amongst investors. And of course there are always outliers.

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How does someone get a meeting with angel investor David S. Rose?

Gust

While the nature of investment metrics means that this STILL is not likely to result in an investment (remember, 400:1 for VC, 40:1 for angels), I really try to ensure that if you’ve shared half an hour of your time with me, you won’t think it was wasted. It’s generally proven amazingly useful to everyone involved.).

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So What is The Right Level of Burn Rate for a Startup These Days?

Both Sides of the Table

The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital. In other words, raising $2 million at a $6 million pre-money valuation has always been easier & quicker than raising $20 million at any valuation.

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Pre-seed is the new seed

Hippoland

Then I asked him about his metrics, which are good, but they are were not at series A level. 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.

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LinkedIn: The Series A Fundraising Story ? AGILEVC

Agile VC

LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point. round which closed in November 2003, and the pre-money valuation between $10 million and $15 million. It was a $4.7M