Startup Professionals Musings

JANUARY 27, 2012

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

betashop.com

OCTOBER 8, 2012

1 year later we sat down and had an honest conversation with ourselves and realized that our One Thing, the thing we were most passionate about, that we could realistically be the best in the world at, and that was a huge untapped market opportunity was: Design. 10M post-money valuation = $100M target.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Both Sides of the Table

SEPTEMBER 18, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. These are all real conversations. What if when you have that conversation you don’t agree?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

OCTOBER 17, 2011

The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” The pre-money valuation is company value today, while the post-money valuation is the pre-money valuation plus the investment amount. Seat on the board.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

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. It’s worth reading his post to understand the problem.

Pre-Money Valuation 150

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

Agile VC

DECEMBER 6, 2012

Of course a VC firm that has stellar performance will often attract new LPs interested in investing, or conversely one that performs poorly will have existing LPs drop out. Well at this juncture Startup X’s valuation is presumably a lot higher than it was at the Series A, maybe even 5-10x+ higher.

LP 178

LP Balance Sheet Differentiation Limited Partner 178

Gust

SEPTEMBER 17, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. These are all real conversations. What if when you have that conversation you don’t agree?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

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). The “promote”, as we have called it, is the founding team’s ownership percentage multiplied by the post-money valuation. VCs have an unfair advantage when it comes to financings.

Pre-Money Valuation 49

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

Haystack

APRIL 10, 2018

with a median post-money valuation of $10.7M — these are the highest Pitchbook has recorded. The side conversations today were the best part, of course, seeing old friends and old faces, and meeting some new friends, as well.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

Feld Thoughts

FEBRUARY 9, 2016

Much of it is very short term focused and, like a giant tractor beam, draws the conversation into a very short time horizon (as in days or weeks). This is a little tricky in early rounds and with modest up-round financings, as you’ll often have a liquidation preference that is high relative to your overall valuation.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

ithacaVC

JANUARY 24, 2013

And let’s assume that the debt has a 20% conversion discount. I am going to ignore any valuation cap feature. Series A premoney valuation negotiated to be $3mm. . $62,000 of convertible debt outstanding with $13,700 of aggregate interest accumulated, which also converts as well in the qualifying round.

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

thestartuplawyer.com

FEBRUARY 24, 2010

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. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Professor VC

FEBRUARY 12, 2015

In the episode, Kristy Kruger talks about picturing unicorns roaming the planes in Africa as a kid and being at a party many years later when the topic of conversation turned to endangered species: It was about a group of five to seven people, kind of standing around the keg, just talking. igthwghjg2q2g8hu4). Sorry about that.

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28