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We recently started a series of posts on establishing the pre-moneyvaluation 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-moneyValuation.
You’re offered a $9 million pre-money to raise $3 million (e.g. 5 million raised at a $9 million pre-moneyvaluation or 35.7% dilution), I would personally probably avoid the extra money because as an entrepreneur the dilution would put me out of my confort zone. 25% dilution).
Despite having over 500k downloads and making $450k in revenue over the last 21 months, he had only $185k left in the bank, which meant that he would be out of business in 90 days if he didn’t raise more money. premoneyvaluation and planned to use the money to market the app. premoneyvaluation).
This implies a premoneyvaluation of $1.045M. See my breakdown of week 2 for more on how to calculate premoneyvaluation.). The premoneyvaluations on the two deals were close enough to be a wash, but the ability to accelerate the business at twice the speed would have been a real differentiator.
In an industry known for its high turnover, a strong and differentiated company culture can help attract and retain talent. Before opening yourselves up to venture capital, you should have enough customers to demonstrate real value and present specific numbers to support your pre-moneyvaluation. .
If you are testing the market to see what terms you can get, just say, “We are targeting to raise $X at pre-moneyvaluation of $Y.” The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital.
pre-moneyvaluation you certainly would want to exercise your right to continue investing if you had prorata rights. ” The pioneering fund of funds realize that their source of differentiation is much more about the latter than the former. ” Stated simply – if you seed funded Uber at $4.5m
million at a $15 million pre-moneyvaluation. We had people hearing through the grapevine that we were about to raise money and new investors started calling us to get in on the deal. million at a $15 million pre-moneyvaluation. We ended up agreeing a term sheet for $16.5 Yes, this was stupid.
Where I don't actually think that's the case is in growth rounds, which seem hyper competitive right now--and where the ability to differentiate yourself as an investor is limited. I assumed the following: Seeds are done as a $1mm round on a pre-moneyvaluation of $5mm. Exits are $250mm. How about price?
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