ReadWriteStart

OCTOBER 7, 2010

As a thumb rule, try to get enough validation so that you can get to at least a $2 million pre-money valuation before raising equity capital. Sub-$2 million pre-money, it is better to bootstrap. If you have to raise money, try to do so as convertible notes. Tags: StartUp 101. Photo by lco.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

crowdSPRING Blog

APRIL 26, 2013

These posts and videos are about logo design , web design , startups, entrepreneurship, small business, leadership, social media, marketing, and more! If there’s one video 1st time founders should watch to understand VC financing it’s this one – [link]. Downfalls of Distributed Startups – [link].

Social Media 90

Social Media Small Business Design Media 90

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. We plan to raise at a $5 million pre-money valuation.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Startup Professionals Musings

NOVEMBER 26, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Gust

SEPTEMBER 27, 2014

To begin with, it is important to understand some basic facts about the world of entrepreneurial finance: There are many more entrepreneurs than there are investors, with the result that only one company out of every 400 that seeks venture funding actually receives it.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. Term-sheets and Valuations: Thinking about Negotiations. For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing. An average of these ranges results in a pre-money valuation of about $4MM.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Lightspeed Venture Partners

OCTOBER 7, 2012

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. But the company had previously raised $5M for 17% of the company, implying a post money valuation after that investment of $29.4M. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Startup Professionals Musings

SEPTEMBER 6, 2010

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Altgate

DECEMBER 16, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Pre-Money Valuation vs Number of Founders Where Do Tech VCs Invest? The first thing I noticed was that the vast majority (76%) of financings have a “one x&# preference.

Liquidation Preference 39

Liquidation Preference Pre-Money Valuation Term Sheet Valuation 39

View from Seed

OCTOBER 21, 2014

As the seed-stage startup fundraise process has received more transparency in recent years, ranging from published advice on how to raise seed capital to increased availability through AngelList, Funders Club, and various accelerator programs, I’ve noticed another trend emerging. Lower-Than-Market Value.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

Startup Professionals Musings

SEPTEMBER 30, 2011

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

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. Marty Zwilling.

Term Sheet 227

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

Gust

NOVEMBER 18, 2012

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

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

Both Sides of the Table

JULY 27, 2014

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. not in video but late stage valuations have grown 24% compounded years for the past 4 years which is higher than any segment.

Valuation 309

Valuation Pre-Money Valuation Non-Compete Later Stage 309

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Denver Pre-Money Valuation 137

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Scott Edward Walker

APRIL 22, 2012

This post is the second part of a three-part primer on convertible note seed financings. Part 1, entitled “ Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask) ,” addressed certain basic questions, such as (i) what is a convertible note? (ii) What Is a Conversion Discount?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

YoungUpstarts

SEPTEMBER 4, 2017

Investing in startups is a lot more than just buying “stock” in a company. For investors who have come to the table with a history investing in publicly listed companies or the property market, it’s easy to think that backing startups is largely a “set and forget” strategy. Ask yourself, where is your startup currently struggling?

Pre-Money Valuation 187

Pre-Money Valuation Seed Stage IP Deal Flow 187

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Gust

OCTOBER 21, 2011

To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. Suppose the notes converted as if the acquisition were an eligible financing round.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

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

Up and Running

SEPTEMBER 20, 2021

Since almost all startups do not possess traditional debt lenders, the list usually consists of data of the shareholders and the percentage they own. For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Common shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

JUNE 30, 2016

conversation literally every week with startups. So the temptation would be to ask for $5 million because that implies a $20 million pre-money valuation if you’re able to only give away 20% or a $15 million pre-money valuation of investors require 25%. I have this “How much should I raise?”

Pre-Money Valuation 292

Pre-Money Valuation Valuation Early Stage Startup 292

Genuine VC

JULY 30, 2012

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndicate 136

Startup Lessons Learned

JUNE 19, 2019

Andy and I will be having a fireside chat at this year’s Lean Startup Conference in October. Probably the biggest change that I've noticed in the Valley is the transition from startups focusing on hardware, to startups built on software, and what that implies about the venture model as well. It's literally impossible.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

The Startup Lawyer

JUNE 22, 2010

If you follow this blog, you know that I think convertible debt is a good structure for a startup’s angel round. EXAMPLE 1 : If a VC invests $2,000,000 at a $5,000,000 pre-money valuation ($7,000,000 post money ) and an angel investor has a $100,000 convertible note with a 25% discount, the angel investor will own 1.9%

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

David Cohen

AUGUST 1, 2018

The reason the entrepreneur want a high cap is to signal a high price for the next equity financing of a larger amount of money. If they accept convertible notes now at a low cap, how could they possibly justify a higher equity price in a few short months when this larger financing is bound to happen? What a deal!

Pre-Money Valuation 87

Pre-Money Valuation Valuation Equity Finance 87

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. The cap is irrelevant if the next equity financing is at a valuation below the cap amount.) These options were granted shortly after MySpace, Inc.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

ithacaVC

APRIL 25, 2014

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. For example, cell E2 is the spot to put in the negotiated pre-money valuation. Dealing with VCs Management Startup Life'

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Participating Preferred 79

The Startup Lawyer

JANUARY 10, 2012

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. If it were up to me, I’d rather have the startup and investor come to terms on the pre-money valuation rather than toying with anything other than a 1x non-participating liquidation preference.

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

David Teten

NOVEMBER 15, 2013

I have frequently heard the expression from other investors, “We can put a lot of money to work here.” This is the psychology that drives VCs to load up a company with more capital, rationalizing that $5m at a $20m pre-money valuation is little different than $10m at a $40m pre-money valuation.

Management 114

Management Pre-Money Valuation Venture Capital New Hampshire 114

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

The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. Closing : Is there a specific date that the convertible debt financing will close, or will there be an open round of seed investment ? 2X/3X, etc.)

Term Sheet 62

Term Sheet Pre-Money Valuation Liquidity Event Warrant 62

The Startup Lawyer

JANUARY 22, 2013

Depending on the delta between the price cap and the pre-money valuation of the qualified equity financing, the convertible note investors could receive a windfall in terms of liquidation preference. The Potential Problem Let’s say Series A investors invest at a pre-money valuation that [.].

Liquidation Preference 54

Liquidation Preference Pre-Money Valuation Valuation Equity 54