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Quick Post on Post-Money Valuations

Rob Go

When I first started out as a VC nearly 9 years ago, most early stage company valuations were expressed as pre-money valuations.

Color: $98M Post-Money Valuation?

Texas Startup Blog

The company raised $41 million from Sequoia and other investors at a post-money valuation of $98 million. Color.xxx Pitch Deck.

Entrepreneurs: It's OK to Divulge Your Last-round Post-money Valuation

Allen's Blog

[Entrepreneurs: read all the way to the bottom of this post; there are different situations that can look confusingly similar, and it''s important to distinguish among them.]. If they like your idea, they may decide whether to pursue it, based, in part, on how high your last valuation was. Sounds confident and experienced. N.B.:

Entrepreneurs: It's OK to Say What Your Last Post-Money Valuation Was

Allen's Blog

Entrepreneurs: the post-money valuation of your last round is a standard bit of info to give to new investors, even prior to the first meeting (if they ask for it prior to the meeting). If they like your idea, they may decide whether to pursue it, based in part on how high your last valuation was. N.B.:

Comparing valuations between rounds

The Equity Kicker

A few of them have done good up rounds and the easiest way to describe the magnitude is to talk about the valuation multiple. Venice Project

The Silliness Of Recapping Seed Rounds

Feld Thoughts

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. ” They are running out of money.

Guest Post: Beware The Post Money Trap

A VC : Venture Capital and Technology

As valuations are extended and it feels very late in this cycle, I feel that the risk of this happening to entrepreneurs is quite high now. This leads them to buy into the idea that more money for the same dilution is always strictly better. The number everyone seems to be forgetting about is the post-money valuation.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. It’s worth reading his post to understand the problem. It’s very simple.

Startups: The Elevator To Success Is Out Of Order

OnStartups

We know the difference between pre-money and post-money valuations. "The elevator to success is out of order. Joe Girard.

The Pre-money vs. Post-money Confusion With Convertible Notes

Feld Thoughts

The other day, Mark Suster wrote a critically important post titled One Simple Paragraph Every Entrepreneur Should Add to Their Convertible Notes. Most notes are ambiguous as to whether they convert on a pre-money or a post-money basis. pre ($25m post).” Go read it – I’ll wait. at $18.5m

Make Price the Last Thing

David Cohen

Entrepreneurs will name the pre-money or post-money valuation, and sometimes they even lead with the pricing. That’s a lot of money , you think. You might even end up raising more money than you expected, and that could impact the price positively. Way more than you had planned to spend on a ring.

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

Feld Thoughts

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. Mark’s post is one of the first in this cycle that I’ve seen from a VC giving clear, actionable advice. But, more importantly, is another point Mark buries later on, which includes an awesome post of his from 2010.

Taking Corporate VC: When It Makes Sense

View from Seed

The post Taking Corporate VC: When It Makes Sense appeared first on NextView Ventures. 2) Is now the right time for us?

Is There More Than One Type Of Convertible Debt?

Ask The VC

I’d recently made an offer to invest in a company Troy was an investor in and the entrepreneur and I got tangled up in the definition of pre and post money in the context of existing convertible debt. In this case there were multiple traunches of convertible debt at different valuation caps. Related articles.

The $10 million Photo and other VC Stories

Steve Blank

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital.

VC Experts Q3 2011 Life Science Valuation Report

Recent Buzzes - VC Experts, Inc.

VC Experts , the premier provider of valuation & deal term data of private company financing transactions, recently released their Q3 2011 Life Sciences Valuation & Deal Term report. Herein is a sampling from the report

What’s Driving Big Valuations in E-Commerce?

Recent Buzzes - VC Experts, Inc.

E-commerce sites are being "pinned" to Pinterest and "tweeted" on Twitter, providing key word-of-mouth marketing to the consumer, by the consumer, that is not only increasing brand equity but also post-money valuations.

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. If you don't entirely understand what I am talking about here, go click on that link at the start of the post. This post is about how to size the option pool.

Keep Term Sheets Simple for Quicker Cash to Spend

Gust

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received.

Common Stock vs. Preferred Stock in Venture Funding Transactions

Growthink Blog

The liquidation preference means what is sounds - namely that preferred stock holders with this right get all of their money back (i.e.

Keep Term Sheets Simple for Quicker Cash to Spend

Startup Professionals Musings

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received.

Why the New Seed Might Be a Bad Seed

This is going to be BIG.

At Brooklyn Bridge Ventures , I want to be part of the first money to go into a company, no matter what you call it. Why not raise $2.5M

Warrants In A Deal With An Advisor

Ask The VC

He has made his money as an entrepreneur and now travels alot but will be available for consultancy for us. The terms associated with this matter – if the time he has to exercise the warrants is long enough (say 10 years) then it’s likely he’ll never have to shell out the money to actually buy the stock.

The Tweetstorm that Spawned the 10,000X Startup

Dshen

You could take companies in the unicorn club and divide their current post-money valuations by 10,000. Wow - 10,000x.

Why You Need a Reverse Roadmap

Fresh Inc.: The Staff Blog

Young entrepreneurs are so focused on the short run--get the money and get the business started--that they don’t sit down and do the math.

Valuation Methods 101

Gust

This is the first of a six part series on different methods used by angel investors to arrive at pre-money startup valuations. It is one of the most useful methods for establishing the pre-money valuation of pre-revenue startup ventures. Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in

Series A Warrants Based On Milestones Versus A Deal With Two Closes

Ask The VC

Let’s assume a post-money valuation of $4m. The post money valuation after the warrant is exercised is $6.25m (2.5m / 0.40). Bottom line – the investor is proposing a $3.75m pre-money / $6.25m post-money for a total investment of $2.5m. for another 1m shares. Got that?

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.

Is it Time for You to Earn or to Learn?

Both Sides of the Table

at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small. 125,000.

The Corrosive Downside of Acquihires

Both Sides of the Table

Let’s assume $2 million in seed money. I talked about the math of this in this post, “ Is it Time to Learn or to Earn.”

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

Both Sides of the Table

There is much talk these days that startup valuations have decreased and may continue to do so and that the amount of time it takes to fund raise may take longer. 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. million. Only you can know.

Bad Notes on VC

Gust

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.

Later-stage rounds and “setting the bar too high”

Chris Dixon

They want to raise more money, and VCs are offering them money at a high valuation. These CEOs are worrying too much. startups

Rovio Ownership Structure Revealed

ArcticStartup

The Finnish Arvopaperi magazine has announced the ownership structure of Rovio, the creators of Angry Birds. Update 7.17

57 Things I've Learned Founding 3 Tech Companies

betashop.com

” This is someone who has done it before — raised money, done deals, worked with startups. It’s easier for many people (especially developers) to post a status update than to write an email. Don’t choose your investors based on valuation. Raise as little money as possible when you first start.

Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed.

Model Cap Table

ithacaVC

I thought it might be useful to post up a model cap table ( Cap Table Model with Waterfall ). In other words, it shows both pre-money and post-money very clearly. For example, cell E2 is the spot to put in the negotiated pre-money valuation. Here are things to note: 1. So… enjoy the model. Thanks.

Why VC’s Don’t “Crossover” Invest

Agile VC

Well at this juncture Startup X’s valuation is presumably a lot higher than it was at the Series A, maybe even 5-10x+ higher.

LP 36

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. Burn rate in case you don’t know is the amount of money a company is either spending (gross) or losing (net) per month. (it Gross burn is the total amount of money you are spending per month. Valuation.

A VC’s take on the Season 5 premier of Sharktank

Lightspeed Venture Partners

to fund the company at a $6M post money valuation from a number of investors including Selena Gomez. pre money valuation).