Valuation Part I: Peeling the Onion, or How Top Investors Value the Startups They Invest In

Gust

Early-stage technology company valuations are generally a crap-shoot. This post builds on top of his work, and attempts to shed additional light on the valuation process. How To Fundraise Starting Your Company valuation valuations

Startup Valuation Tips

YoungUpstarts

In order to attract investors, you have to know the valuation of your company or how much your company is worth. Many new business owners struggle with valuation because it isn’t as easy as crunching some numbers. Take a look at this infographic to learn more about valuation.

Trending Sources

When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

As the seed-stage startup fundraise process has received more transparency in recent years, ranging from published advice on how to raise seed capital to increased availability through AngelList, Funders Club, and various accelerator programs, I’ve noticed another trend emerging.

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.

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.

Valuations 101: The Venture Capital 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. It is one of the useful methods for establishing the pre-money valuation of pre-revenue startup ventures. The concept is simply…since: Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in Then: Post-money Valuation = Terminal Value ÷ Anticipated ROI.

What Startups Need To Know About Business Valuation

YoungUpstarts

With the daily demands of running a business along with the financial pressures and challenges inherent in early-stage companies, a business valuation may not be the first thing an entrepreneur thinks of when he awakes each morning. When does a startup company need a business valuation?

5 Ways To Radically Improve Your Company Valuation

YFS Magazine

For business owners, startup valuation is a topic that causes lots of angst, raises tons of questions and definitely gets emotions blazing. But let’s take a step back.

2012 Valuation Survey of Angel Groups

Gust

This summer I conducted our third annual survey of the pre-money valuation of pre-revenue companies recently funded by angel groups in North America. Access to our 2010 and 2011 surveys can be found at 2011 Valuation Survey of North American Angel Investor Groups. We asked each group for their median (middle) pre-money valuation of pre-revenue deals. 2012 Valuation Survey. pre-money valuation in US$ millions).

A Bubble for Seed Stage Valuation

Angel Investing News

When entrepreneurs raise equity capital for startup companies, the investors’ percentage of ownership is determined by the negotiated valuation for the company at the time of investment. For example, if the negotiated pre-money valuation is $1.5 the valuation of the company increases. But, as Mark Suster points out, the valuation of startup ventures also varies with demand. Suster suggests we will see the valuation bubble burst within the next 24 months.

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.”

How To Compute The Valuation of Your Startup

FairSoftware's Blog

Startup valuation is a misunderstood and complex topic. But that’s not the right approach to understand how valuation works for your startup. As you launch your startup, you are really shooting for a certain trajectory. Silicon Valley Startups

How Startup Valuation Works

Business Plan Blog

Startup Valuation is Tricky Business. A valuation is simply an estimated value of a company and is often based on assumptions surrounding the company’s current and future potential. How Startup Valuation Works.

How we determine valuations for marketplaces

Version One Ventures

I often get asked about how to determine the valuation for a marketplace startup that is starting to scale. Our assumptions for this valuation: Scale: > $1b GMV. But you might be wondering how to value your early-stage marketplace startup.

What Are We Talking About When We Talk Valuation?

Early Growth Financial Services

Valuation is one of those ubiquitous words: at least when it comes to discussions around startups — and, of course, stock market multiples. In fact, there are several types of valuations and they come into play at different times in a company’s lifecycle. For example, there are the private company valuation figures that get bandied about: think the numbers people reference for Uber and AirBnB for example. And then there are 409A valuations.

Failsafe Ways to Increase Your Startup Valuation

Early Growth Financial Services

Ahh startup valuations. Why are valuations even important? Besides determining things such as the amount of equity you give up for funding and how much value you are able to extract from your company in the long-term, valuations are important for demonstrating how attractive your business is to investors and in showing how you compare with your industry peers. Below are some of the key takeaways: There are 3 main types of valuation: 1.

Om Malik on why valuations defy metrics

The Equity Kicker

That’s true, but in the startup industry we have to do it every day. For larger valuations it is the latter. There are no new metrics or valuation methodologies on the horizon, so expect to see more hard to understand valuations. Startup general interest

Age of companies when they achieve $1bn valuations

The Equity Kicker

It seems to me there are two obvious explanations for the dramatic reduction in the time it takes for companies to achive $1bn valuations: The pace of change is increasing allowing new companies to develop and mature faster. Startup general interest

US startup valuations reach ten year highs

The Equity Kicker

Venturebeat reported yesterday that US startup valuations have reached ten year highs. You can see from the charts above that median valuations have been increasing at all stages from seed through to Series D or later.

8 things to consider when determining your startup valuation

The Next Web

Setting a valuation for an early-stage startup looking to raise money is tough. To help, I asked eight founders from YEC the following: What is one thing I should be thinking about as I come up with a valuation… This story continues at The Next Web.

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. 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 Cayenne Valuation Calculator.

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 lot of my time is spent helping early-stage companies get to proof points so that they can raise capital.

Startup Valuations: 7 Things to Look for in a Valuation Company

Early Growth Financial Services

Valuation. What you may not know is that it really does matter who performs your valuation. There are a lot of valuation companies out there, so I know many entrepreneurs are tempted to just shop around until they find the lowest price, but this is a mistake. A valuation is more than just a commodity. All valuations are not created equally; there are better valuations, better processes, and better valuations business partners for your company.

5 Reasons Startups Need Revenue As Well As Users

Startup Professionals Musings

Every startup dreams of achieving that milestone, when they can focus more on scaling the business and enjoying their earnings, rather than fighting for another investment infusion. entrepreneur revenue growth startup success user count valuation

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.

2011 Valuation Survey of North American Angel Groups

Angel Investing News

During the summer of 2010, I developed a workshop, A New ACEF Valuation Workshop for Angels and Entrepreneurs. To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies. See the 2010 data reported here: Current Pre-money Valuations of Pre-revenue Companies. 2011 Angel Group Valuation Survey. Valuation.

The Startup Failure Rate Among Angel-Funded Companies

Gust

With all the news about hundred million dollar rounds and billion dollar valuations, it can be hard not to look at the world of entrepreneurship and angel investing as a thrilling ride that only has one stop: success. Starting Your Company When Startups Fail

Startup Valuations – Again….

ithacaVC

I have written about startup valuations previously. This morning I was reading one of my favorite daily compilations of articles (called Innovation Daily, subscribe here ) and came across another great short article on startup valuations called “ Seed Rounds: How to Pick a Valuation “ Joseph Walla, who I don’t know, wrote it. 2] This can often justify a higher valuations – and for good reason. Things to note about valuation: 1.

2011 Valuation Survey of North American Angel Groups

Gust

During the summer of 2010, I developed a workshop, A New ACEF Valuation Workshop for Angels and Entrepreneurs. To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies. See the 2010 data reported here: Current Pre-money Valuations of Pre-revenue Companies. 2011 Angel Group Valuation Survey. Pre-money Valuation of Pre-revenue Companies.

How This Health Insurance Startup Landed Its $1.75 Billion Valuation

Inc Startups

Oscar is well-funded and growing, and recently landed on the list of unicorns for 2015. But it's got lots of work to do to maintain its lead

Why Does Startup Pricing Vary by Location?

Gust

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices. After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

The Resetting of the Startup Industry

Both Sides of the Table

Much has changed in the past four months of the technology startup world and how outsiders value the business. As we noted in our survey of more than 150 VCs we know in the industry, many saw drops in Q4 valuations last year with nearly all of them projecting decreases in 2016.

Deals Gone WIld (aka "What Drives Massive Startup Valuations?")

Seed Stage Capital

skip to main | skip to sidebar 11 January 2011 Deals Gone WIld (aka "What Drives Massive Startup Valuations?") You can view that post (and the valuation table) here. What drives the sky-high valuations and manias we occasionally see around a deal?

The Secrets Behind Many Successful Startups

Vinicius Vacanti

“What is your startup’s unfair advantage?”, But, how in the world is a startup supposed to have an unfair advantage? A startup friend of ours told us they were launching a daily deal company. Many Successful Startups Start with a Secret. startups

Tech Startup Valuations Explained – It All Comes Down to Willingness

Inc Startups

How do tech start-up valuations work

Why Does Startup Pricing Vary by Location?

Gust

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices. After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

Startup Physics

A VC : Venture Capital and Technology

Yesterday I suggested another to William Mougayar via Kik when he observed to me that valuation mania has emerged in the blockchain for financial institution space. I have used the word “physics” to describe a few things here at AVC over the years. I am tempted to write a “textbook” on this topic as I have observed many “formulas” over the years that seem to repeat themselves again and again.

Dave McClure Braces for Startup Valuation Drop

Inc Startups

It's still a good time to look for early funding but don't try to jack the market, says the CEO of Silicon Valley accelerator 500 Startups

Join The Unicorn Club Of Billion-Dollar Companies

Startup Professionals Musings

Based on some good estimates of how many new ventures have been started in the last five years, the statistical odds of any individual startup making it to this level are less than one in a million. But, I’m not suggesting that you take the focus off of valuation.

Top 10 internet stocks – more than 1 trillion valuation

Start Up Blog

While we are on the topic of economic change, it is telling to have a look at the market valuations of the top 10 internet companies. entrepreneurship Bitcoin business entrepreneurs internet startups technology top 10 list In a very short period of time, opinions of anything can change. It wasn’t so long ago that these statements were made about the internet as a commercial platform: It’s for nerds.