Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Truthfully.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

SEPTEMBER 14, 2010

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” Seat on the board.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Pascal's View

JULY 9, 2017

This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. It will be worth the time and effort. Sound simple?

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.” Seat on the board.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

This is going to be BIG.

MARCH 28, 2021

You go back and forth on a price and you eventually settle on a post-money valuation cap of $6.5mm, meaning you have sold about 23% of your company. The first round is $3mm with a post-money valuation of $10mm, the Series A is $9mm with a post-money valuation of $30mm and so on.

Founder 159

Founder Post-Money Valuation Dilution Valuation 159

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. It’s worth reading his post to understand the problem. In the old days VCs funded off of a “pre-money” valuation. So how DOES a VC think about financings at early stages?

Pre-Money Valuation 150

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

Both Sides of the Table

AUGUST 1, 2010

In these cases we proactively offer to lead their next round of financing. If we can’t agree on price I tell entrepreneurs that they can raise money and say “GRP will speak for half of the round.&# Done – the only signal is positive. Tags: Startup Advice Tech Market Analysis VC Industry.

Post-Money Valuation 298

Post-Money Valuation Term Sheet Warrant Partner 298

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). If Acme Ventures III, LP invests in Startup X then typically Acme Ventures IV, LP would not.

LP 178

LP Balance Sheet Differentiation Limited Partner 178

ithacaVC

APRIL 25, 2014

I thought it might be useful to post up a model cap table ( Cap Table Model with Waterfall ). This cap table can be used by a pre-funded startup and then a financing can be layered in. In other words, it shows both pre-money and post-money very clearly. Dealing with VCs Management Startup Life'

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. You probably thought that valuations would be roughly the same as they were the last time you raised money. Hope that you feel this. Feel this way forever.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

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. Dealing with VCs Management Startup Life'

Pre-Money Valuation 58

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

Feld Thoughts

FEBRUARY 9, 2016

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. I watched, participated, and suffered through every type of creative financing as companies were struggling to raise capital in this time frame. But, as you raise more money at higher valuations, this will normalize.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Haystack

APRIL 10, 2018

with a median post-money valuation of $10.7M — these are the highest Pitchbook has recorded. OK, so microVC funds and smaller pre-seed financings could really be a thing. Um… wow. A number of companies that will go public this year and next (like Dropbox) didn’t raise obscene rounds of funding early.

Seed Stage 60

Seed Stage San Francisco Ratchet Silicon Valley 60

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

ithacaVC

JANUARY 24, 2013

Having a relatively small about of convertible debt on your balance sheet prior to your Series A financing is not a bad thing. In our example, if the premoney is $3mm and the Series A new investors are putting in $1mm, then they expect to own 25% of the company after the closing ($1mm invested/$4mm post money).

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. You probably thought that valuations would be roughly the same as they were the last time you raised money. Outkast, Ms. Things change. Why do things change?

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Professor VC

FEBRUARY 12, 2015

I doubt Aileen Lee of Cowboy Ventures believed that a horse with a horn existed when she wrote Welcome To The Unicorn Club: Learning From Billion-Dollar Startups in late 2013, but she probably had no idea that it would become a hot buzzword in Silicon Valley and hit the cover of mainstream business press, Fortune Magazine. igthwghjg2q2g8hu4).

Las Vegas 28

Las Vegas IPO Pre-Money Valuation Valuation 28

Lightspeed Venture Partners

SEPTEMBER 23, 2012

post money valuation. Mark Cuban offered $300k for 33% of the company, implying a $900k post money valuation. implying a $600k post money valuation. The company ended up negotiating with Cuban and settled on $300k for 30% of the company, or a $1M post money valuation.

Pre-Money Valuation 164

Pre-Money Valuation Post-Money Valuation Valuation Dilution 164