View from Seed

DECEMBER 4, 2019

Over the last 10 years, we’ve been in a bull market with considerable froth in late stage financing activity and valuations. Looking at all vintages from 2005 to 2014, the top 5% TVPI is between 40% to 127% better than the top quartile TVPI. This would suggest that TVPI would be performing well.

LP 256

LP IRR Distribution Portfolio 256

Both Sides of the Table

SEPTEMBER 16, 2010

As I’ve highlighted I believe we’re in a unique period similar to 2005-08 where the biggest tech firms of Silicon Valley (and some media companies) are scooping up small software companies as “talent acquisitions&# versus accretive revenue / profit generators. avoid being diluted). But it is. So know that going in.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Dilution 283

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Growth can dilute a business’s culture and customer value proposition and put the business in a different competitive space.

Dilution 209

Dilution Virginia Management Washington 209

Altgate

DECEMBER 15, 2010

It is a pretty narrow filter of the 750+ companies that completed the 2010 CompStudy survey, but there are 55 rounds of financing to look at…enough to be a meaningful dataset I think. This chart shows that adding additional founders to the team is in fact dilutive, but also that the more founders the more dilutive.

Pre-Money Valuation 66

Pre-Money Valuation Valuation Cofounder Founder 66

Hunter Walker

JANUARY 15, 2016

Though I should point out was still doing client work for OneMatchFire until mid-2005 until the business could pay full salaries. From the middle to 2005 to early 2010 the business was break-even or better every quarter. Now it’s time for the Finance, Portfolio and Expansion teams to take over.

Technical Review 48

Technical Review Startup Cofounder SMS 48

Both Sides of the Table

APRIL 14, 2010

Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. It is 2010. That means that they likely raised money at a particularly high price relative to 2010 prices.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Ben's Blog

JULY 16, 2013

3/31/2005: 22.8. Smart investors will want the founders and employees to be properly motivated post-financing, so there may be a way to a reasonable outcome for both you and your people. If we took too much dilution, we will work with our new investor to make sure that every employee is still highly financially motivated.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73