Pascal's View

JULY 9, 2017

This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. It will be worth the time and effort. Sound simple?

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

Both Sides of the Table

SEPTEMBER 25, 2010

Having re-read it, I believe his real premise instead is, “Fixed-size, multi-investor angel rounds are such a bad idea for startups that one wonders why things were ever done that way.&#. On this assertion, for the reasons that Paul articulates in his post, I’m aligned. When I’m in, I’m in. rings true to me.

Finance 286

Finance Term Sheet Technical Review Warrant 286

ReadWriteStart

JULY 21, 2011

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital. They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. I say, "Why can't you guys do a $10 million post money valuation?"

Post-Money Valuation 122

Post-Money Valuation Valuation IPO Venture Capital 122

Both Sides of the Table

MAY 30, 2018

I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you. Of course, unlike cars there is no direct comparison across each startup so these are just some general guidelines to try and even the information field.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

www.mint.com

MARCH 9, 2010

If you are considering working at a startup, you should ask these questions. What is the post-money valuation of your last round? Post-money valuation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count).

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

Both Sides of the Table

JULY 22, 2010

How VC’s Calculate Valuation : We walked through a standard deal where you raise $1 million at a $3 million pre-money valuation leading to a $4 million post money valuation. Tags: Startup Advice This Week in Venture Capital. Heck, maybe we’ll even invite a lawyer on to do it with us!

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Both Sides of the Table

JUNE 5, 2015

Over the years I’ve written extensively about the downsides of convertible notes for startups such as here , here and here. In the old days VCs funded off of a “pre-money” valuation. Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m.

Pre-Money Valuation 150

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

Steve Blank

JULY 19, 2011

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital. They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. After about our fifth meeting I’m in their conference room.

Post-Money Valuation 251

Post-Money Valuation Venture Capital Valuation IPO 251

Gust

JUNE 21, 2014

Therefore, if the maximum market cap we can hope for from a company is $2 million at the end of the day, and our investment needs to return 30x, that means the post-money valuation after our investment needs to be $2m ÷ 30, or $66,666.

Angel Investor 127

Angel Investor Post-Money Valuation Valuation Time Value of Money 127

Both Sides of the Table

JULY 25, 2010

The key to this strategy is getting 5 people who form the social proof to help you get a bigger angel round done at a higher valuation by tons of industry insiders and thus offering the social proof you need attract great employees and ultimately venture capital investors. Tags: Raising Venture Capital Startup Advice.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Startup Professionals Musings

SEPTEMBER 14, 2010

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board. Marty Zwilling.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

View from Seed

SEPTEMBER 13, 2018

The flood of seed-funded companies coupled with proliferation of seed funds willing to underwrite incremental capital into new and existing portfolio companies, has yielded a broad backlog set of “seed startups” with wild variations across the following three dimensions: 1. Effective) post-money valuation.

Seed Stage 136

Seed Stage Post-Money Valuation Valuation Startup 136

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. Post-money valuation probably no higher than $12M (2). How to Evaluate Firms for a Seed VC Syndicate 10 July 2012, 5:13 pm What A VC Orders for Breakfast Says 27 June 2012, 10:16 am To Leave or Not to Leave as Your Startup Grows 12 June 2012, 12:21 pm. April 17, 2011.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. I’m supposed to believe that my best innovation can only come from scores of startup founders who just made millions and have now become CVOs at my company? Go do a startup.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Lightspeed Venture Partners

OCTOBER 7, 2012

As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. But the company had previously raised $5M for 17% of the company, implying a post money valuation after that investment of $29.4M.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Board Effect

MAY 13, 2019

Let’s not waste time listing everything startups could be doing to more effectively manage their cap tables. When it comes to cap table management in startup companies, it’s unrealistic to expect perfection. Before we dive into managing cap tables for startups, let’s define what they are. Can we be real? That’s a long list.

Cap Table 40

Cap Table Management Liquidity Event Dilution 40

View from Seed

JANUARY 11, 2017

A startup can benefit in various ways from having a strategic investor involved in their company, but there are plenty of drawbacks too, both commonly known and more subtle. On the flip side, simply taking strategic investor capital because it’s there or it’s easier or cheaper than other capital rarely works out well for startups.

Strategic Investors 120

Strategic Investors Post-Money Valuation Seed Stage Cofounder 120

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. Dealing with VCs Management Startup Life'

Pre-Money Valuation 58

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

Both Sides of the Table

NOVEMBER 4, 2009

This is part of my Startup Advice series. at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small. So a friend recently called to ask for advice on becoming the CTO of a startup. If it doesn’t you’ll have done 3 startups by 26.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

SEPTEMBER 18, 2014

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. Startup Lessons' Less than you’ll probably grant your most junior employees in stock options?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

ithacaVC

APRIL 25, 2014

I thought it might be useful to post up a model cap table ( Cap Table Model with Waterfall ). This cap table can be used by a pre-funded startup and then a financing can be layered in. In other words, it shows both pre-money and post-money very clearly. Dealing with VCs Management Startup Life'

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

David Cohen

FEBRUARY 10, 2017

Entrepreneurs will name the pre-money or post-money valuation, and sometimes they even lead with the pricing. Think of your startup in the same way. I receive lots of pitches, and one of the things I notice is that sometimes these pitches are very clear on pricing.

Post-Money Valuation 48

Post-Money Valuation Valuation Lean Community 48

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million.

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

The Startup Lawyer

OCTOBER 9, 2010

But this morning I read a Dallas Business Journal article that I found amusing: A new accelerator is planning to invest $200,000 and provide up to 45,000 square feet of office space to about 10 mobile app startups in exchange for 15-20% equity in each startup. (a) a) That’s $20,000 per startup for a 15%-20% equity stake.

Dallas 91

Dallas Seed Capital Incubator Post-Money Valuation 91

Haystack

APRIL 10, 2018

with a median post-money valuation of $10.7M — these are the highest Pitchbook has recorded. I continue to contend there are potentially four stages of seed — pre, seed, second/extension, and post — and that as a manager I designed my fund to be able cut a meaningful check at any phase.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

Lightspeed Venture Partners

SEPTEMBER 21, 2013

to fund the company at a $6M post money valuation from a number of investors including Selena Gomez. Despite having over 500k downloads and making $450k in revenue over the last 21 months, he had only $185k left in the bank, which meant that he would be out of business in 90 days if he didn’t raise more money.

Pre-Money Valuation 164

Pre-Money Valuation Valuation Dilution Distribution 164

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. You probably thought that valuations would be roughly the same as they were the last time you raised money. Hope that you feel this. Feel this way forever.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

VC Cafe

JUNE 10, 2022

The market correction has come for series A and seed startups. For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. Until now, early stage startups were relatively unaffected. How quickly should startups scale?

Valuation 152

Valuation Marketing Venture Capital 152

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. This is a little tricky in early rounds and with modest up-round financings, as you’ll often have a liquidation preference that is high relative to your overall valuation. Go read it now – I’ll wait.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

AUGUST 1, 2010

If we can’t agree on price I tell entrepreneurs that they can raise money and say “GRP will speak for half of the round.&# Done – the only signal is positive. Tags: Startup Advice Tech Market Analysis VC Industry. Obviously this “half the round&# offer has limits. But in all reasonable circumstances were in.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

This is going to be BIG.

MARCH 28, 2021

Consider the first money you ever take from VCs. You go back and forth on a price and you eventually settle on a post-money valuation cap of $6.5mm, meaning you have sold about 23% of your company. Well, what if I actually started looking at your net worth on paper given those valuations? million from investors.

Founder 133

Founder Post-Money Valuation Dilution Valuation 133

Lightspeed Venture Partners

OCTOBER 1, 2012

There is a lot of momentum in startups. It is always possible, but as an investor, there are usually better opportunities to put your money to work, where momentum is on your side. But if the company is sold for less than their post money valuation, they would prefer to get their money back.

Pre-Money Valuation 155

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 155

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. You probably thought that valuations would be roughly the same as they were the last time you raised money. Outkast, Ms. Things change. Why do things change?

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

ithacaVC

JANUARY 24, 2013

In our example, if the premoney is $3mm and the Series A new investors are putting in $1mm, then they expect to own 25% of the company after the closing ($1mm invested/$4mm post money). So the new Series A investors end up with 24.4% ($1mm/$4,094,625).

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53