Agile VC

APRIL 17, 2011

How They Make Money: Majority of Kayak’s revenue actually comes from advertising on their site (55%), not lead generation or referral fees to travel suppliers as you might think (more on this below). Financial Snapshot: 2010 Revenue: $170 million. Revenue growth: 51% YoY (2010), 1% YoY (2009), 131% YoY (2008).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Gust

NOVEMBER 15, 2011

The Risk Factor Summation Method the fifth methodology for estimating the pre-money valuation of pre-revenue companies we have described in recent posts. For more information on determining the average valuations in your area, see the Scorecard Method. million pre-money valuation.

Valuation 102

Valuation Pre-Money Valuation Ohio Early Stage 102

Both Sides of the Table

FEBRUARY 25, 2010

million at a $15 million pre-money valuation. 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. If it’s a biz deal you might care about IP protection, revenue share, investment commitments to joint marketing – whatever.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Both Sides of the Table

MAY 28, 2018

There are many things a VC is looking for in reviewing your business plan but beyond things the like the quality of revenue, margins, OPEX and CAPEX there’s a really simple rule I call, “Cash In, Cash Out, Milestones Achieved.” One big mistake I see many founders make is asking for an unrealistic amount of money in the fund raise.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

SEPTEMBER 29, 2009

Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million. Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. I argued for literally a year to slash burn.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. I said that at the Founder Showcase, too. and profits!

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Gust

NOVEMBER 7, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. This calculator uses 25 questions to size up the progress of the new venture and calculate a pre-money valuation for investment purposes.

Valuation 87

Valuation Pre-Money Valuation Venture Capital Technical Review 87

Gust

NOVEMBER 2, 2011

We recently started a series of posts on establishing the pre-money valuation 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. Characteristic.

Valuation 79

Valuation Pre-Money Valuation Intellectual Property Southern California 79

ReadWriteStart

OCTOBER 7, 2010

So at any point, if you are trying to raise money, and you are hearing from investors that you are too early and have too little validation, it may be a good thing. 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.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

BeyondVC

APRIL 12, 2005

Combine this relative value with the fact that many tech companies, particularly large software companies, derive 50-70% of their revenue from annual recurring maintenance and you have an opportunity to buy out many of these businesses due to their predictable cash flow.

LBO 78

LBO Pre-Money Valuation Technical Review Software Review 78

Lightspeed Venture Partners

OCTOBER 29, 2012

The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 pre money valuation. Unsurprisingly, all the sharks passed, based on market size and valuation expectations. Revenue or distribution can both be evidence that, in the Bear and the Rat’s case, the dogs literally are eating the dogfood.

Pre-Money Valuation 97

Pre-Money Valuation Offshore Valuation Cofounder 97

Gust

JULY 23, 2014

and upload both your presentation (the version that doesn’t need you to come along with it), and a short (very short), elevator pitch video. Now comes the really tricky part: getting me to review all that stuff you just neatly uploaded.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

VC Cafe

SEPTEMBER 26, 2022

ValuatIon should be a function of value, not ego. Kawasaki’s Law of Pre-Money Valuation: for every full-time engineer, add $500,000; for every full-time M.B.A., A good way to think about valuation in seed/pre-seed is to reverse engineer the next round. Our goals, their goals. subtract $250,000.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. That is to say, they’d want to be able to control costs and revenues at a high level.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Lightspeed Venture Partners

OCTOBER 7, 2012

They won a design award at a trade show, but have no revenue and no orders. 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. Kevin questioned the use case since bowls are ubiquitous. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

SoCal CTO

FEBRUARY 2, 2011

Bill Payne is an expert on how early-stage investors should look at valuation. He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. Especially interesting is the Valuation Worksheet towards the end. It's required reading.

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

BeyondVC

APRIL 12, 2005

Combine this relative value with the fact that many tech companies, particularly large software companies, derive 50-70% of their revenue from annual recurring maintenance and you have an opportunity to buy out many of these businesses due to their predictable cash flow.

LBO 60

LBO Pre-Money Valuation Technical Review Software Review 60

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

Berkonomics

JUNE 5, 2014

Yet, at the pre-revenue stage of development, angel investors price both companies at a pre-money valuation of $1.5 It is possible to grow a company to a valuation of $30 million on one or two angel rounds of investment. It doesn’t seem right, huh? But, it is… and here is why.

Pre-Money Valuation 92

Pre-Money Valuation Valuation Angel Investor Dilution 92

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

Both Sides of the Table

FEBRUARY 15, 2016

The earlier the round, the less capital you need and the more reasonable your valuation the less time that is needed generally to raise capital. In other words, raising $2 million at a $6 million pre-money valuation has always been easier & quicker than raising $20 million at any valuation.

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

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

Both Sides of the Table

JULY 27, 2014

Most of those industries are fee-based and are competing on revenue growth. Four years ago people paid $66m median pre-money valuation and are now paying $155m. I don’t totally agree with that view. Venture is a returns based and I believe has different characteristics.

Valuation 309

Valuation Pre-Money Valuation Non-Compete Later Stage 309

Tim Keane

JANUARY 12, 2010

3]   However, if they are built bottom up, they demonstrate and make explicit a range of business model assumptions the entrepreneur is using to think about his business and its revenue model. An average of these ranges results in a pre-money valuation of about $4MM. stake in the company. The Consideration of Risk.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Lightspeed Venture Partners

SEPTEMBER 21, 2013

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. pre money valuation and planned to use the money to market the app. pre money valuation).

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

This is going to be BIG.

OCTOBER 10, 2014

The criteria for what is a Seed and what is a Series A for these purposes is whether or not the first round of the company was within the same year that I did the investment, and it had to be less than $750k of prior money. Well, if you group them all up, here''s what you get: Pre-Money Valuations (M). No Revenues.

Pre-Money Valuation 158

Pre-Money Valuation Dilution Valuation Term Sheet 158

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

Gust

OCTOBER 12, 2011

To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies. See the 2010 data reported here: Current Pre-money Valuations of Pre-revenue Companies.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

www.paulgraham.com

OCTOBER 23, 2010

If you give an investor new shares equal to 5% ofthose already outstanding in return for $100,000, then youve donethe deal at a pre-money valuation of $2 million. Ididnt realize that when we were raising money. A rich companyis one with large revenues. This money isnt revenue. Thereis no rational way.

Startup 105

Startup Cofounder Software Stock 105

Both Sides of the Table

APRIL 14, 2010

It’s frustrating because you did $4 million in revenue last year and have a $7 million run rate for this year and you’re struggling to get financed for even $5 million while other startups are out there with no revenue raising $10 million at a $40 million pre money valuation! But pass they will.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Lightspeed Venture Partners

OCTOBER 1, 2012

pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. The company came back and offered him 20% of the company for the $200k (an $800k pre money valuation). They were seeking $200k for 10% of the company (a $1.8M

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Up and Running

SEPTEMBER 20, 2021

For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Here is an example of a cap table after a round of funding, with a pre-money valuation of $1 million. percent going to Investor B, and 9.6

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. The angel agrees to invest at a pre-money valuation of $1 million.The company issues $200,000 worth of new shares to the angel; ifthere were 1000 shares before the deal, this means 200 additionalshares. So theyre going to raise $200,000.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Lightspeed Venture Partners

OCTOBER 22, 2012

The company has gotten off to a fast start, $150k in revenue in the first two months, with all the marketing coming from social media. This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). In 2010 they did $10k in profits.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. First priority is real revenue, customers and contracts. Future revenue projections are not relevant at the pre-revenue stage.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

YoungUpstarts

SEPTEMBER 15, 2018

The pre-money valuation of other startups is based on the following factors. Here it should be mentioned that “quantifiable” revenue is a must even if you are ready with a pathbreaking idea. Young businesses do take time to catch up on the revenue curve. They will actually want to know who are paying you.

Pre-Money Valuation 124

Pre-Money Valuation Valuation Sweat Equity Startup 124

Berkonomics

DECEMBER 19, 2013

Revenue projections: What will happen to the company if the revenues and earnings projected on a worst case basis are not achieved as predicted? When will the company run out of money if the development of the enterprise is at a slower rate than expected? Has this been tested with investors?

Pre-Money Valuation 105

Pre-Money Valuation Liquidity Event Cofounder Valuation 105