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 19, 2017

Rule 1: Bootstrap until you have a viable product. Seeking that funding prior to launching a viable product, however, would have virtually ensured that Klemm would largely cede control of the company to PE investors. Takeaway lesson: A shocking number of technology startups never even get their first product out the door.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Up and Running

SEPTEMBER 20, 2021

For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Here is an example of a cap table after a round of funding, with a pre-money valuation of $1 million. percent going to Investor B, and 9.6

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. Unsurprisingly, all the sharks passed, based on market size and valuation expectations. Shelton came under intense questioning about how she justified her valuation given no proof of demand.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

View from Seed

AUGUST 30, 2019

team, market, product, stage/traction) but also the potential deal itself (i.e. how much the company is raising, valuation expectations, round/syndicate dynamics, etc.). I can see this being a doable deal at an $X pre-money valuation with a $Y check from us. ” .

Pre-Money Valuation 174

Pre-Money Valuation Syndicate Syndication Valuation 174

Both Sides of the Table

APRIL 20, 2011

Twitter wanted to raise money for this new venture at a pre-money valuation which was quite a bit higher than First Round’s $10 million limit. First Round Capital’s pre-money range is usually between $3-5 million. Is a completed product necessary to get funding? To say something that is not credible.

Pre-Money Valuation 284

Pre-Money Valuation Technical Review Cofounder Cram Down 284

Both Sides of the Table

AUGUST 23, 2010

When Quora went into Beta and became the “hip product to have access to&# in Silicon Valley I felt compelled to play around with it. And they are trying to bake in user adoption into the design of the product. At an $86 million, pre-money valuation Benchmark sure did pay up for this investment. No, really.

Silicon Valley 301

Silicon Valley Pre-Money Valuation Technical Review Software Review 301

Lightspeed Venture Partners

SEPTEMBER 21, 2013

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 and planned to use the money to market the app. pre money valuation).

Pre-Money Valuation 161

Pre-Money Valuation Valuation Dilution Distribution 161

Startup Professionals Musings

NOVEMBER 26, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)?

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Gust

JULY 23, 2014

I almost never invest in ideas or plans, so you’ll need to have a company and at least a product, if not customers. I’m also allergic to funding “bridges to nowhere”, so I would like to hear your explanation of what you are going to do if no money appears to follow your seed round.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

crowdSPRING Blog

APRIL 26, 2013

Q1 Venture Capital Spending & Number Of Deals Down, M&A Activity Drops 44 Percent And Pre-Money Valuations Plummet – [link]. “sometimes you have the right product but the wrong business model.” How to build great products – [link]. Want To Be More Productive?

Social Media 90

Social Media Small Business Design Media 90

Both Sides of the Table

JUNE 22, 2011

But this mania to not miss out on the next big thing is driving some investors to pay growth-equity prices for traditional market risk (as in, they’re paying up before it is clear there is product / market fit). If you are interested the Vimeo is here. And so on down then line. If a company that would traditionally raise $500k at a $3.5

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Startup Professionals Musings

SEPTEMBER 30, 2011

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)?

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

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.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

Both Sides of the Table

SEPTEMBER 29, 2009

The pricing problem – So an investor put $5 million at a $10 million pre-money valuation in a company with a great beta product but no real customers. The company was therefore priced at $15 million post-money and the VC (s) own 1/3 rd. It is no wonder why they had less time for new deals. Can a deal get done?

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Lightspeed Venture Partners

OCTOBER 7, 2012

The first company started as a BBQ catering business, and eventually focused in on their most popular product, a dip made of blended up chicken plus various sauces. While they were very complimentary of the team and product, they all gave versions of the “I’m not the right guy to help, so I’m out” pass.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The right number to focus on is pre money valuation as that is how an investor is valuing the company before the investment. Post money valuation = Pre money valuation + Investment. post money valuation and a $1.35M pre money valuation.

Pre-Money Valuation 157

Pre-Money Valuation Post-Money Valuation Valuation Dilution 157

David Teten

SEPTEMBER 16, 2014

Villalobos & Payne: “Startup Pre-Money Valuation: The Keystone to Return on Investment” 117. After years of leading busy and productive lives, lying on the beach and sipping cocktails just does not cut it. Wiltbank & Boeker: “Returns to Angel Investors in Groups” 3,097. approx 1999-07.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

Both Sides of the Table

FEBRUARY 17, 2011

When you see evidence that there is this so called “product / market fit&# then you may be ready for larger amounts of capital. You’re offered a $9 million pre-money to raise $3 million (e.g. 5 million raised at a $9 million pre-money valuation or 35.7% They evolve the product faster.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Both Sides of the Table

FEBRUARY 15, 2016

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.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? Image via eHow.com.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)?

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later. This goes back to point #1.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Lightspeed Venture Partners

NOVEMBER 19, 2012

He developed the product out of necessity. Interestingly, this new deal actually lowered the pre money valuation for the company. 75,000 for 10% implies a $675,000 pre money valuation. 150,00 for 20% implies a $600,000 pre money valuation. He was pretty impressive.

Pre-Money Valuation 160

Pre-Money Valuation Alabama Valuation Churn Rate 160

Hunter Walker

AUGUST 7, 2017

What if we split the pain [ie increase pre-money valuation slightly on our end and founders take slightly more dilution off their end]?” Of course these conversations also work best when both the founders and investors have had a productive, give-and-take negotiation up to this point.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Agile VC

MAY 26, 2011

Yes… he was a very successful PayPal exec and previously co-founder & VP Product of SocialNet. Not long after the product launch we began the initial conversations with VCs for a Series A round. round which closed in November 2003, and the pre-money valuation between $10 million and $15 million.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

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

The Startup Lawyer

FEBRUARY 4, 2011

The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value. Pre-money valuations startups receive from incubators are typically low…really low. 2) Scrutinize the Investment Structure. Do they know your space?

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Gust

SEPTEMBER 27, 2014

In order to be competitive, a company needs to have just about everything in place, from its product to its team to market traction, before it is ready to seek funding. Your private profile is where investors will look with a critical eye on everything that makes you a business rather than just a product or a sexy idea.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

Lightspeed Venture Partners

OCTOBER 22, 2012

This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). The pre money valuations on the two deals were close enough to be a wash, but the ability to accelerate the business at twice the speed would have been a real differentiator.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Lightspeed Venture Partners

OCTOBER 1, 2012

pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. The company came back and offered him 20% of the company for the $200k (an $800k pre money valuation). They were seeking $200k for 10% of the company (a $1.8M

Pre-Money Valuation 152

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 152

View from Seed

OCTOBER 21, 2014

Using NextView as an example, since we both seek to lead the seed round and only lead during this round, I’ve seen this trend manifest in one of two ways: In a priced round, the entrepreneur will often share their valuation ask (or a stated floor) for the pre-money valuation of their company much sooner in the process.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

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

Hippoland

AUGUST 31, 2018

Another consideration here is that in the minds of pre-seed investors (who are very often small funds and will be allocating most of their capital in the first round or two), valuation matters a lot more to them than a larger fund who might invest in you at this stage as an option for later. This goes back to point #1.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

The Startup Magazine

SEPTEMBER 12, 2019

Focus on Product Development First. We prioritized validation from our customers by listening carefully to what our customers wanted and focusing on early-stage product development. Without outside pressure to push forward, we were able to pause and fine-tune our product as customers needed. It certainly was for us.

Early Stage 85

Early Stage Venture Capital Bootstrapping Pre-Money Valuation 85

Startup Lessons Learned

JUNE 19, 2019

Meanwhile, we recently talked with him about his thoughts on 35 years in Silicon Valley, why the skill sets of venture capitalists and CEOs are so different, and why telling a good story about your product is so crucial. If they really could build what they said they could, then you knew that people would buy the product.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

K9 Ventures

MARCH 23, 2011

That’s an invaluable exercise, which is probably even *more* important in the early stages of the company, while you’re still trying to figure out the technology, the product, the market, the pricing, the team. The correct answer is that at a $1M pre-money valuation, the discounted share price for the note holder would be $0.80.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132