Pascal's View

JULY 9, 2017

Andrew Krowne and I recently co-wrote an article in Tech Crunch , Why SAFE Notes Are Not Safe for Entrepreneurs. This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. Many entrepreneurs lose track of what they have been cooking up in the cap table.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

The Next Web

DECEMBER 30, 2012

If you’re a startup, you are by definition competing with the smartest people in the world – either large companies with more resources than yours or fellow entrepreneurs who are hoping to disrupt large companies. I’ve gathered a comprehensive list of resources for startup learning. Let’s get started!

Artificial Inteligence 156

Artificial Inteligence Founder Private Equity Ruby 156

Both Sides of the Table

SEPTEMBER 25, 2010

Having re-read it, I believe his real premise instead is, “Fixed-size, multi-investor angel rounds are such a bad idea for startups that one wonders why things were ever done that way.&#. On this assertion, for the reasons that Paul articulates in his post, I’m aligned. Maybe one day it won’t. rings true to me.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

OCTOBER 12, 2014

” If you invested at $8m pre-money and put $2m in (thus you own 20% of a company at a $10m post-money valuation) and if you put another $2m into a round at a $40m valuation raising $10m ($50m post) you end up with half your money at $8m pre and half at $40m pre thus your average price goes up dramatically.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

ReadWriteStart

JULY 21, 2011

When we were trying to raise money for E.piphany, my last startup, I was negotiating with a venture capital firm called Infinity Capital. They really wanted to invest, but it was the beginning of the bubble, and I wanted (what was then) an absurd valuation. I say, "Why can't you guys do a $10 million post money valuation?"

Post-Money Valuation 122

Post-Money Valuation Valuation IPO Venture Capital 122

Both Sides of the Table

JULY 22, 2010

And for some strange reason entrepreneurs didn’t share this information. Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. I’ve started from day one trying to build total transparency into my process with entrepreneurs.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

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

Both Sides of the Table

JUNE 5, 2015

Over the years I’ve written extensively about the downsides of convertible notes for startups such as here , here and here. In the old days VCs funded off of a “pre-money” valuation. Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m.

Pre-Money Valuation 150

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

Both Sides of the Table

JULY 25, 2010

Any SoCal entrepreneur raising early-stage money should put Rincon on their short list. He covers this is the first 15 minutes or so of the video and he’s awesome to listen to (more than 25,000 people have listend to this video so far – mostly entrepreneurs ;-)). It is how angel rounds come together.&#.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

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

www.mint.com

MARCH 9, 2010

If you are considering working at a startup, you should ask these questions. What is the post-money valuation of your last round? Post-money valuation” is the value of the company after the last round of money was put in (again, lines of credit and promises don’t count).

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

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

Lightspeed Venture Partners

OCTOBER 7, 2012

This does neither, so I’m out” Cuban said, “I see you guys not as entrepreneurs but as wantrepreneurs” I agree with him. In this way, they remind me of the Lifter Hamper entrepreneur. That’s why most entrepreneurs do not make a specific ask on valuation, but wait to hear offers from investors.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. Post-money valuation probably no higher than $12M (2). Im a former Silicon Valley entrepreneur turned East Coast VC. How to Evaluate Firms for a Seed VC. How To Think About The Future. Cliff Notes S-1: Kayak. April 17, 2011. Quinstreet priced at $15.00/sh Author howerl.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. And a few teams of super talented, educated and bright entrepreneurs make a few mill. Almost certainly the startup would have raised some capital. Go do a startup.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

NOVEMBER 4, 2009

This is part of my Startup Advice series. I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X&# or not. at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

betashop.com

OCTOBER 8, 2012

It has been awesome, flattering, and humbling to see that post went viral and has been seen by so many thousands of people — mainly aspiring entrepreneurs — and has been translated into many languages. There’s no time to dicker around at a startup. Startups are hard work. 500M valuation = $5B target.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Agile VC

DECEMBER 6, 2012

A little more inside baseball from the VC biz… why VC’s rarely make “crossover” investments, with capital from multiple funds the VC firm manages invested in a single startup (see note 1). I was talking with an entrepreneur recently about this phenomenon. Why wouldn’t Fund IV invest at this stage?

LP 178

LP Balance Sheet Differentiation Limited Partner 178

ithacaVC

JANUARY 14, 2014

I was giving some advice the other day on how to approach Series B investors in terms of valuation. Company X raised its Series A at a pre-money valuation of $5mm and it raised $4mm dollars. So the post-money valuation after the Series A was $9mm. What should the pre-money valuation be for the Series B?

Pre-Money Valuation 58

Pre-Money Valuation Post-Money Valuation Valuation Term Sheet 58

This is going to be BIG.

MARCH 23, 2015

So whereas seed rounds five years ago may have been less than a million dollars on a pre-money valuation of three or four million, today''s seed is up and over a million and usually closer to two million, with post money valuations nearing $10 million.

Post-Money Valuation 60

Post-Money Valuation Valuation Pre-Money Valuation Seed Money 60

David Cohen

FEBRUARY 10, 2017

Entrepreneurs will name the pre-money or post-money valuation, and sometimes they even lead with the pricing. Think of your startup in the same way. I receive lots of pitches, and one of the things I notice is that sometimes these pitches are very clear on pricing.

Post-Money Valuation 48

Post-Money Valuation Valuation Lean Community 48

The Startup Lawyer

OCTOBER 9, 2010

But this morning I read a Dallas Business Journal article that I found amusing: A new accelerator is planning to invest $200,000 and provide up to 45,000 square feet of office space to about 10 mobile app startups in exchange for 15-20% equity in each startup. (a) a) That’s $20,000 per startup for a 15%-20% equity stake.

Dallas 91

Dallas Seed Capital Incubator Post-Money Valuation 91

Lightspeed Venture Partners

OCTOBER 1, 2012

Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. Price is always a consideration in investing, but particularly so if the entrepreneurs have shown an interest in an early exit. The entrepreneur was seeking $100k for 20% of the company. FUZZI BUNZ.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Both Sides of the Table

AUGUST 1, 2010

Many firms do it in a way that can be more detrimental to entrepreneurs. If you don’t understand the concept of “signaling&# please read the blog post I wrote on Understanding VC signaling. Tags: Startup Advice Tech Market Analysis VC Industry. This is the nature of compromise.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. We entrepreneurs have been spinning that line for decades in every boom cycle.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Lightspeed Venture Partners

NOVEMBER 12, 2012

When asked why the company is worth a $1M post money valuation, he said, “What it comes down to is passion.” All entrepreneurs have passion. All the sharks passed, some with very harsh words for the entrepreneur and the idea. ” The sharks actually laughed in his face when he said that.

Valuation 107

Valuation Post-Money Valuation Viral Algorithm 107

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Board Effect

MAY 10, 2019

In the early days, tracking the percentage of ownership in a startup is easy. Things can escalate quickly, however, when a startup decides to seek investors. A well-kept cap table is a necessary ingredient of proper recordkeeping long after a startup has “started up”. Why do cap tables matter?

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation.

Pre-Money Valuation 164

Pre-Money Valuation Post-Money Valuation Valuation Dilution 164