ReadWriteStart

OCTOBER 7, 2010

Before I do, however, I want to talk about a thumb rule that I'd like to propose to entrepreneurs about raising money. 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. I encouraged Todd to keep building.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

YoungUpstarts

SEPTEMBER 11, 2013

As an entrepreneur, you’ll face a bevy of challenges. Sometimes the list of challenges may feel never ending – from writing the business plan to finding the right partner – but one of the single most important challenges entrepreneurs face is calculating a realistic, defensible pre-money valuation. .

Pre-Money Valuation 133

Pre-Money Valuation Valuation Angel Investor Cofounder 133

Both Sides of the Table

SEPTEMBER 10, 2021

And there is so much money around being thrown at so many entrepreneurs that many firms don’t even care about board seats, governance rights or heaven forbid doing work with the company because that would eat into the VCs time needed to chase 5 more deals. And the truth is that several entrepreneurs prefer it this way.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. Background: Adam Carlson is a serial entrepreneur who has successfully raised private capital at three different technology startups.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Both Sides of the Table

FEBRUARY 15, 2016

This has led VC & entrepreneur bloggers alike to similar conclusions: start raising capital early and be careful about having too high of a burn rate because that lessens the amount of runway you have until you need more cash. I’m surprised how few entrepreneurs have this open conversation with their investors.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Both Sides of the Table

FEBRUARY 17, 2011

This conversation seems to come up very frequently these days both with portfolio companies and with entrepreneurs just looking for mentorship. Every conversation about fund raising should start with what your current operational needs are and the stage of your business. How long is the window open?

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. We plan to raise at a $5 million pre-money valuation. million pre-money. If you do an uncapped note it’s bad for the investor.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. 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

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

View from Seed

OCTOBER 21, 2014

In short, more and more entrepreneurs are signaling their price expectations earlier in their seed fundraise process. Or, in the case of a convertible note, they’ll explicitly state a valuation cap. In theory, there are three levels of pricing for an entrepreneur to potentially signal to a prospective investor: 1.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

Both Sides of the Table

APRIL 3, 2010

So as an entrepreneur it’s hard to navigate those waters over time. As usual the rule is, if you’re doing well, they’ll find the money for your next round.&#. Is their money being used to “protect&# the investment that was made from Fund 1? Everything that Roy mentions is true.

Pre-Money Valuation 226

Pre-Money Valuation Venture Capital LP Term Sheet 226

Austin Startup

JUNE 21, 2018

Our pre-money valuation for the seed round is 2 trillion dollars.” Now, if you’re a crypto entrepreneur, you still have to abide by the basic rules of good startups (link shamelessly inserted if you missed it before). Now go out and make Ronald Coase proud: start lowering those transaction costs crypto entrepreneurs!

Securities and Exchange Commission 61

Securities and Exchange Commission SEC Pre-Money Valuation Security 61

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Seat on the board.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I learned all of this myself on your side of the table raising money at my first company. Existing investors won’t want to have these conversations.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Both Sides of the Table

MAY 30, 2018

One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.” As an entrepreneur it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

YoungUpstarts

SEPTEMBER 4, 2017

For startup founders and CEO’s it’s also just as common to see them place too much focus on the amount of money raised, and the pre-money valuation, rather than the value that each investor can bring to the table. Entrepreneurs, business owners, senior managers at large corporations.

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. In the old days VCs funded off of a “pre-money” valuation.

Pre-Money Valuation 150

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

K9 Ventures

MARCH 23, 2011

Obviously, both the founders and the note holders have the common objective of getting the company funded; but assuming the company is fundable, there is a basic misalignment of incentives when it comes to valuation. The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Genuine VC

JULY 30, 2012

Sharing these expectations early in potential lead investor discussions fundamentally qualifies the conversations, but it also runs the risk of prematurely losing a potential financing partner or reducing options to maximize a financing process outcome. By definition, all entrepreneurs should think that their endeavor is truly exceptional.

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndicate 136

David Cohen

AUGUST 1, 2018

When valuations rise, so do the caps on notes, which are upper limits on valuation at conversion. In many cases the caps are very high because the entrepreneurs are telling the investors that they’re super confident they’re about to raise a larger round and they just need to “bridge” the company to that larger round.

Pre-Money Valuation 87

Pre-Money Valuation Valuation Equity Finance 87

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Denver Pre-Money Valuation 137

Both Sides of the Table

FEBRUARY 4, 2016

note: to follow realtime conversations & engage with me on Facebook you can follow me here: https://www.facebook.com/msuster ]. Limited Partners (LPs) who invest in VC funds have continued to pour money into venture – with the market returning to pre-recession levels. The result of all of this new money?

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Gust

OCTOBER 12, 2011

In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. Particularly when there are multiple closings taking place over a period of months, the fuse burns awfully quickly on a 12-month note given the many competing priorities of early stage entrepreneurs.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) was spun out, and the valuation was set by that financing round.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

venturehacks.com

OCTOBER 21, 2010

If you don’t keep your eyes on the option pool while you’re negotiating valuation, your investors will have you playing (and losing) a game that we like to call: Option Pool Shuffle You have successfully negotiated a $2M investment on a $8M pre-money valuation by pitting the famous Blue Shirt Capital against Herd Mentality Management.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Seeing Both Sides

JULY 15, 2009

A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). Thus, the universe of financings that even the most experienced entrepreneurs get directly exposed to is typically 5-10 financings over a 15-20 year career. What is the promote?

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

Scott Edward Walker

APRIL 9, 2012

Part 2 will discuss the two most significant issues for founders in connection with the issuance of convertible notes: (i) the valuation cap and (ii) the discount (and how they interrelate). Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii)

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

ithacaVC

JUNE 3, 2015

Quick explanation: a note with a valuation cap provides that upon a subsequent conversion of the note to equity resulting from a subsequent equity round (let’s say a Series A round), the note holder either converts at a price equal to (i) a stated discount to the Series A price OR (ii) a price determined using the valuation cap.

Liquidation Preference 40

Liquidation Preference Pre-Money Valuation Dilution Valuation 40

Agile VC

MAY 26, 2011

I also joke with Reid Hoffman that this was back in the days before he was “Reid” Reid’s an incredible entrepreneur, startup investor, and human being. Not long after the product launch we began the initial conversations with VCs for a Series A round. It was a pretty good valuation for the time. It was a $4.7M

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

thestartuplawyer.com

FEBRUARY 24, 2010

Entrepreneurs often believe their startup company faces legal threats from only external sources. do not think being friends or relatives reduces the need for these difficult and/or awkward conversations. Because now you have more to lose than just a company and your (or someone else’s) money.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40