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Startup Valuation Tips

YoungUpstarts

When starting a business, chances are you are mainly focused on trying to get everything together so you can make that first sale. In order to attract investors, you have to know the valuation of your company or how much your company is worth. Determine Your Valuation.

Valuations 101: Scorecard Valuation Methodology

Gust

In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Scorecard Valuation Methodology. 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. Pre-money valuation varies with the economy and with the competitive environment for startup ventures within a region.

Valuation vs Ownership

A VC : Venture Capital and Technology

They want to own 20% of the business but care less about the valuation. Another firm shows up, a firm that is less valuation oriented, and they offer $5mm for 20% of the business, which works out to $20mm pre/$25mm post. The first deal would produce $20mm in proceeds at sale, an $18mm gain, and a $3.6mm carry if you charge 20% as we do at USV. And it is why USV is committed to small fund sizes, small rounds, and smaller valuations.

10 Rules of Thumb for Startup Investment Valuation

Gust

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.

Startup Valuation: How Much Is Your Company Worth?

Seed Stage Capital

skip to main | skip to sidebar 19 January 2010 Startup Valuation: How Much Is Your Company Worth? One of the most common issues that concern entrepreneurs is how to address the "Valuation Question." How do we best approach the question of valuation?

Demystifying Small Business Valuation

Inc Startups

A successful small business sale begins with a solid grasp of business valuation. Left unchecked, the valuation process can quickly devolve into a pricing routine that is rooted in personal attachments and other subjective inputs rather than solid data based on marketplace realities.

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

Both Sides of the Table

Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. I just want to figure out what a fair valuation is.&# I figured all the VC’s talked so we should.

How Investors Think About Valuation of Pre-Revenue Startups

SoCal CTO

Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. Bill Payne is an expert on how early-stage investors should look at valuation. He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. Especially interesting is the Valuation Worksheet towards the end. A few things jumped out at me: - Experience in sales or technology - considered a minor negative?

A Five-Minute Tutorial On How To Value Your Startup

Startup Professionals Musings

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.”

The Trap of Relative Value

Feld Thoughts

In it, he talks about how he handles public company stocks that he ends up with either via an IPO or a sale of a company he’s involved in to a public company. He’d gotten a random note asking about his valuation when we invested relative to another financing that was just announced. The other company, which was much smaller at the point of investment, got an 11x ARR valuation. Each of these examples got me thinking about the relative valuation trap.

Stock 87

Join The Unicorn Club Of Billion-Dollar Companies

Startup Professionals Musings

The fact is that valuations are largely set by top venture capital investors and financial firms, and they all have their own proprietary formulas for assigning value. If your new venture is still in the idea or development stages, don’t even think about a high valuation.

How Technology Impacts Small Business Valuations and Sale Prices

Inc Startups

Beyond revenues and profits, small businesses' IT aptitude will start playing a larger role in building value and attracting buyers

Can Twitter Justify Its $11 Billion Valuation?

Inc Startups

A lot of entrepreneurs are probably watching the excitement over the approaching initial public offering of Twitter and wondering if they can get a similar valuation for their companies. That''s quite high compared to Facebook, whose price-to-sales ratio is 21.

Facebook, Twitter, & startup valuations - The best properties always look too expensive

Don Dodge on The Next Big Thing

The experts thought Microsoft was crazy when they invested $240M in Facebook at a $15B valuation. Digital Sky Technologies invested $200M in Facebook in May of 2010 at a $10B valuation. Just 7 months later Goldman Sachs is investing $500M at a $50B valuation. Techcrunch reported that Facebook has been valued at $50B based on sales on Second Market. Market valuations are asymmetric. Market leaders demand much higher valuations than smaller players or clones.

Convertible Debt: Worst Form Of Seed Financing — Except For All The Others

Gust

Advising investors, I would advocate for traditional convertible notes (with a valuation cap) over this new structure. Invested Interests angel investment convertible debt convertible note deal terms financials fundraising shareholders structure terms valuation valuations

How to Value a Blog for Sale

Blogtrepreneur | Entrepreneur Blog

However, a blog is a business that generates revenue and the traditional valuation method of a multiple of yearly earnings is the accepted valuation methodology from buyers when buying a blog. In this article we will explore what yearly multiple your blog might fetch and what factors increase or decrease that valuation. They are a little less educated and require more training time after the sale. Traditional Valuation Methods. Blog Valuation Methods.

Valuations 101: The Dave Berkus Method

Gust

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. Product Rollout or Sales. Note that the numbers are the maximum for each class (not absolutes) so a valuation can be $800K (or less) as easily as $2.5

How to value your company for sale (Part 1)

A Smart Bear: Startups and Marketing for Geeks

I recently helped a friend broker the sale of his small, bootstrapped company. This is a smart guy with experience and a logical approach to such things, but the way he was initially trying to value his company was not only wrong, but the wrong way to think about the entire sale.

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Getting A Software Patent Is Valuable But Frustrating

Startup Professionals Musings

I still generally advise software startups to file a patent as a barrier to entry from competitors and to increase their valuation by investors, but every entrepreneur needs to understand the tradeoffs. business frustration intellectual property software patent startup valuation

10 Ways to Size Your Company’s Value for Funding

Startup Professionals Musings

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)?

Don’t get hung up on valuation.

Berkonomics

I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up premoney valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road.

Cracking The Code: Building Your SaaS Sales Compensation Plan

Cracking the Code

Building Your SaaS Sales Compensation Plan. Compensating the sales force is a difficult task and the key is usually to keep things simple, so that each sales rep knows what he needs to optimize to make more money at the end of the quarter. Labels: SaaS , sales and marketing.

E-Commerce: Funding, Terms & Valuations Pre-IPO

Recent Buzzes - VC Experts, Inc.

Is it really what a company offers or is it the e-commerce platform that drives the sale? SaaS platforms in the social/e-commerce industry are about finding the right channels and connecting your brand to the world, topped with a sense of excitement and urgency, (the sense of excitement from getting a good deal and the sense of urgency of the deal not lasting forever

DoubleVerify Raises $33 Million on a $200 Million Valuation

VC Cafe

Founded in 2008 by Oren Netzer (CEO) and Alex Liverant (CTO), DoubleVerify has 160 employees in their two offices in Tel Aviv (R&D) and New York (Sales) and it plans to add another 50 by the end of the year.

VC Posts That Say What The VC Thinks About How It All Works

Feld Thoughts

For example, see his post today on Valuation vs. Ownership. I’m going to hang out in the comments on Fred’s Valuation vs. Ownership post and Jason’s The “VC Bargain” post today. Venture Capital equity mendelson ownership sale valuation wilson Some of my favorite VC posts are ones that say what the VC posts that say what the VC thinks about how it all works.

Don't Flub Your Billion Dollar Valuation

Inc Startups

Recent valuations driven by a red-hot venture capital investment scene are eye-popping, but you need to justify your value. That in turn often drives those companies'' valuations into the billion-dollar stratosphere. Nearly forty companies have received billion-dollar valuations in the past couple of years. says companies need to focus on at least one of three things to justify a billion-dollar valuation: Profits, revenue or market dominance.

DFJ, Pasadena Angels lead $1.4M funding in Edufii

Ask the Angels

Blog Company Creation/Operation Fundraising General News Angel Capital Angel Investing Company Sale Exit Strategies Pasadena Angels Startups Valuation VC DFJ Frontier and Pasadena Angels have led a $1.4 million Series A funding in Edufii Inc., the social/mobile platform for skill development.

Measuring sales and marketing effectiveness of SaaS companies

Cracking the Code

Measuring sales and marketing effectiveness of SaaS companies. Labels: SaaS , sales and marketing , software. a new entrant trying to gain awareness in the marketplace investing in various mktg programs and sales to get the lead-gen engine flywheel started)? Cracking The Code.

Sales 26

Why a Valuation is Less Important Than You Think

Inc Startups

There are certain cases in which a third-party valuation is essential. Essentially, this is the problem with business valuations. A business valuation is a detailed financial analysis that gives you an estimated range of what your company is worth. Sales can go up or down.

Flash Sales Startup One Kings Lane Sold for a Fraction of Its Once-$900 Million Valuation

Inc Startups

The home goods website struggled as flash sales lost popularity

Finding the Right Business Broker for Your Business Sale

Inc Startups

Some of the nation''s leading business-for-sale experts offer their tips to help you find the broker that is the right fit for your sale. Their role as sale facilitators streamlines the process, allowing them to focus on the deal while you continue to operate the business.

Dilution concerns by founders and investors

Taffy Williams

Just recently, a company’s team exchanged numerous emails discussing valuation and downstream dilution. A few key areas to consider : Does the capital raise enhance development and increase valuation of the company? Does failure to raise capital harm the company valuation?

Just Eat looking plump with a £1.5bn valuation after IPO

ArcticStartup

in sales and pre-tax profits of £10.2m. Just Eat CEO David Buttress describes himself as an “anti cooking activist” on his business card, and while amusing it tells you something of the bullish nature of a company determined to make an impact.

How to value your company for sale (Part 2)

A Smart Bear: Startups and Marketing for Geeks

ME: Sure, but maybe that competitor would further validate and grow the market, which could increase your sales and make you even more attractive to a buyer! They know there’s a minimum valuation, under which you’re not interested.

Valuations 101: The Risk Factor Summation Method

Gust

The Risk Factor Summation Method the fifth methodology for estimating the pre-money valuation of pre-revenue companies we have described in recent posts. Readers may have noted that both the Scorecard Method and the Dave Berkus Method considered a narrow set of important criteria for investment in arriving at a pre-money valuation. Sales and marketing risk. For more information on determining the average valuations in your area, see the Scorecard Method.

Some Perspective

A VC : Venture Capital and Technology

I don't disagree with PG when he says that Facebook's IPO performance (or lack thereof) has the potential to impact valuations in startup land. I think it will be particularly impactful on the late stage and secondary markets where most of the IPO valuation speculation is happening. But let's put Facebook's current valuation in perspective. At the closing price of $26.90, Facebook commands a valuation of $57.5bn ( according to Google Finance ).

What is Sweat Equity Worth?

www.entrepreneur.com

Marketing Sales & Marketing Home Marketing Basics Sales Online Marketing Finding Customers Social Media Branding Social Media Does Your Companys Social Personality Need a Makeover? Franchises Franchises Home Franchise 500 Home-Based Low Cost Top New Fast Growing Top Global Biz Opportunities Franchises for Sale Franchises A Bright Forecast for a Solar Panel Installation Franchise. Sweat equity is just one component of early-stage valuation. Sales & Marketing.

7 Paths to a Small Business Sale

Inc Startups

Deciding to sell your business is a big decision, but once you''ve realized you''re ready to move on the next step is to choose the sales path that best meets your needs. With your sales objectives clearly defined, the next step is to evaluate and choose your sales path.

allensblog: Entrepreneurs Should NOT Answer This Question: "What.

Allen's Blog

Entrepreneurs Should NOT Answer This Question: "What Are Your Valuation Expectations?".   Quite often, if not all the time, they get asked by VC's in pitches: "What are your valuation expectations?"   We're reasonable people, with good, experienced advisors who know what the market valuation data, and VC minimum ownership requirements, are -- and we understand that the market will set the price." allensblog. Thoughts from a startup sherpa.

Here’s Why Year-Old Startup Slack Gets $1.1 Billion Valuation

Inc Startups

Not only does it have real sales, but has found that less sometimes can be more in a crowded market