VC Cafe

JUNE 10, 2022

The market correction has come for series A and seed startups. For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. The market correction has come for Series A and seed startups (Source: Pitchbook ). How important are margins?

Valuation 151

Valuation Marketing Israel Venture Capital 151

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) Marketing demand creation programs (Search Engine Marketing, Public Relations, Advertising, Lead Generation, Trade Shows, etc.)

Lean 263

Lean Silicon Valley Startup RSS 263

crowdSPRING Blog

FEBRUARY 21, 2014

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! “The deal values WhatsApp users at $35 each but the current market cap of Facebook values its MAUs at $140 or so.” WhatsApp: The inside story | Wired UK - crowdspring.co/Mexzv0.

Social Media 92

Social Media Small Business Design Media 92

VC Cafe

FEBRUARY 27, 2024

Seed is about showing initial product market fit. Below are just a few contributors to the rise of pre-seed in the current market: Explosion of Micro funds – In recent years, there’s been a steep increase in the number of micro funds, which are generally below $100M in size. who’s talking to customers?)

Valuation 186

Valuation Software Review Generative AI Technical Review 186

VC Cafe

FEBRUARY 27, 2023

Taking stock of the venture capital market in 2023, it’s clear to see that we’re in a transition point. Prices went up from round to round, and startups were encouraged to grow, grow, grow, and not to worry about profitability. In today’s market, I believe small is beautiful, and that specialisation matters.

Venture Capital 215

Venture Capital Technical Review LP Institutional Investors 215

Both Sides of the Table

FEBRUARY 8, 2016

And when prices are dropping on a VCs existing companies in market, there is a substantial reduction in FOMO (fear of missing out) for new deals, which means that investors take their time in making investment decisions. Don’t assume that you can “just do a down round” if necessary. Down rounds are corrosive.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

crowdSPRING Blog

MAY 10, 2013

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! The Damaging Psychology of Down Rounds | by Mark Suster – [link]. Twitter Link Roundup #177 – Small Business, Startups, Innovation, Social Media, Design, Marketing and More.

Social Media 93

Social Media Small Business Design Media 93

Berkonomics

OCTOBER 5, 2023

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

VC Cafe

SEPTEMBER 26, 2022

Before product-market fit… just care about speed of iteration according to your customer feedback. But valuations, especially those in the private market, are not necessarily a predictor of growth/ success. A good way to think about valuation in seed/pre-seed is to reverse engineer the next round. Team, product, market.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

ReadWriteStart

JUNE 1, 2020

The next reason is to establish a competitive advantage over your competition and quickly acquire a substantial market share. Let’s take an example – In the case of an internet or app business, the user traction and market penetration is a must. Establish a competitive advantage. Both of which are expensive and time-consuming.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Genuine VC

FEBRUARY 9, 2011

Plus, VCs often will have met the Founder/CEOs of many of a particular startup’s competitors, so they’ll have an even richer understand of the market landscape. So most of your calculus in selecting the right startup role should involve understanding the company’s market and business plan in executing toward a grand vision.

Startup 146

Startup Burn Rate Technical Review Down Round 146

Berkonomics

AUGUST 10, 2017

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Berkonomics

MARCH 30, 2010

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

Lightspeed Venture Partners

OCTOBER 7, 2012

This isn’t a company yet, it’s an idea, and the founder could do a lot more on his own to validate product-market fit before raising capital. As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. They were right to do so.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

ReadWriteStart

JANUARY 13, 2024

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Steve Blank

APRIL 26, 2022

For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value. (A A cram down is different than a down round. Why do VCs Do This?

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Startup Professionals Musings

NOVEMBER 25, 2020

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Your options for funding just increased, or at least you have a new way to get some real market feedback on the demand for your solution.

Equity 411

Equity Angel Groups Accredited Investor Due Diligence 411

Feld Thoughts

FEBRUARY 9, 2016

Once again, as we find ourselves in the middle of a significant public market correction, especially around technology stocks, there’s an enormous amount of noise in the system, as there always is. Then, if you end up doing a down round, it suddenly matters a lot. Go read it now – I’ll wait.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Both Sides of the Table

SEPTEMBER 18, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. A down round? Cashflow projections?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

MAY 30, 2018

VC firms see thousands of deals and have a refined sense of how the market is valuing deals because they get price signals across all of these deals. VCs hate “down rounds” and many don’t even like “flat rounds.” If a VC prices a flat or down round it means that management teams are often taking too much dilution.

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Both Sides of the Table

SEPTEMBER 27, 2010

We need venture debt, factoring companies and public markets. There is no way for people to keep prices down – it’s a competitive market. The only solution as an investor is to sit the market out as Chris Sacca said he’s inclined to do. In public investing you can get in and out even in a bull market.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

Ben's Blog

JULY 16, 2013

What about the efficient market hypothesis? Aren’t markets rational? If markets behave rationally, one might expect the ratio of price to earnings to be reasonably stable over the period (click here for complete data set). Because markets are not logical; markets are emotional. Yes, we did a down round.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

VC Cafe

JANUARY 2, 2023

As growth investments (and valuations) go down, unicorns might struggle to survive, according to Globes. Israeli public tech companies saw market cap decline of 65% in 2022. The recent valuations analysis by Carta shows the valuation benchmarks across industry (note that the valuations are for the US market, so discretion is advised).

Valuation 158

Valuation Down Round Israel Venture Capital 158

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. With the public markets down, these groups began writing down Unicorn valuations. Emotional Biases.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

I recently survey more than 150 VC friends from all stages and geographies what they thought about the market by asking “Which of the following statements best describes your mood heading into 2016?” I’ll spare you the math and point out that this means we funded 0.104% of the market. In short – no.

Valuation 150

Valuation Down Round Startup Later Stage 150

Startup Professionals Musings

AUGUST 6, 2023

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Your options for funding just increased, or at least you have a new way to get some real market feedback on the demand for your solution.

Angel Groups 201

Angel Groups Accredited Investor Due Diligence Equity 201

www.paulgraham.com

APRIL 28, 2010

As a company gets more established,its valuation gets closer to an actual market value. And since I knowfrom my own experience that the rule against buying stock fromfounders is a stupid one, this is a natural place for things togive as venture funding becomes more and more a sellers market. they decide to start talking to VCs.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees.

Marketing 70

Marketing Down Round Startup IRR 70

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Like Mark Zuckerberg, who built a site only for college students, we are looking for a small, protected market that you as an entrepreneur, can dominate. Why does it need to be a small market?

Finance 205

Finance Silicon Valley Valuation Startup 205

Reid Hoffman

JUNE 8, 2021

And all of the other smart and operational decisions that have enabled Airbnb to weather the storm and go on to have one of the most successful public market debuts. It’s a market. And I thought, well, no one’s marketing. And I made a decision not to do an equity round, because I thought it would be a down round.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Both Sides of the Table

FEBRUARY 4, 2016

” There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. But these data points are often lagging indicators and perhaps a better barometer of the future would be to gather data on VC perceptions in the market right now.

LP 150

LP Valuation Burn Rate Pre-Money Valuation 150

VC Cafe

JANUARY 29, 2024

That’s the case for most companies that are already in the market, especially if they raised funding at imaginary valuations before. Seed valuations are down “only” 57% compared to Q4 2021. Many startups extended runway, cut costs and took on painful down rounds or expensive debt to avoid raising in 2023.

Global 171

Global Generative AI Venture Capital Valuation 171

VC Cafe

SEPTEMBER 6, 2024

and team Somite Therapeutics on your $10M seed round to leverage AI and big data to develop cell replacement therapies! Mazel tov Amit Monheit and team Odeeo on your $5M funding round to expand your global audio advertising for games to the US market! billion compared to $6.7 billion in Q1-Q2-Q3/2023. AI and all the rest.

Israel 97

Israel Down Round Silicon Valley Stealth 97

The Equity Kicker

JANUARY 22, 2014

You rush a few key hires, overbuild the team, ramp marketing spend. A few quarters in, you realize that product/market fit is not quite there, or you’re not as far up the sales learning curve as you thought, or your LTV/CAC is suddenly in the toilet. To meet growth and revenue targets, you hire and spend like never before.

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

Both Sides of the Table

JUNE 5, 2016

The funding environment for tech startups is an ever shifting ground as we go through predictable shifts that go hand-in-hand with the slowing of the overall market. This works in a booming market or in a company that never hits any headwinds. Non VC Growth Rounds. The market eventually slowed down. VC Infighting.

Venture Capital 150

Venture Capital Silicon Valley Burn Rate LP 150

Startup Professionals Musings

MAY 20, 2016

Unreasonably high early valuations hurt the entrepreneurs, as well as professional investors, later when a second round becomes a down round or can’t be negotiated. Your options for funding just increased, or at least you have a new way to get some real market feedback on the demand for your solution.

Angel Groups 136

Angel Groups Accredited Investor Equity Due Diligence 136

Gust

SEPTEMBER 17, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. A down round? Cashflow projections? I’m not sure.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153