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The market was down considerably with public valuations down 53–79% across the four sectors we were reviewing (it is since down even further). ==> Aside, we also have a NEW LA-based partner I’m thrilled to announce: Nick Kim. But rest assured valuations get reset. In 2009 we could take a long time to review a deal.
2 preamble issues having read the comments on TC today: 1: I know that the prices of startup companies is much great in Silicon Valley than in smaller towns / less tech focused areas in the US and the US prices higher than many foreign markets. Again, prices are expressed as pre-moneyvaluations. That’s fine.
pre-moneyvaluation you certainly would want to exercise your right to continue investing if you had prorata rights. But the biggest changes in our industry have been driven by technical changes themselves to which we are just observers and fortunate beneficiaries. 2007 was the watershed year. The iPhone was released.
In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Working within a network of angel investors also expands the pool of expert resources and helps divide the work of screening companies and investment duediligence. million for pre-revenue companies.
million at a $15 million pre-moneyvaluation. 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. We moved into the legal process and final duediligence in January and February of 2000. Yes, this was stupid. I’ve done it.
Detailed descriptions will be published over the next few weeks: The Scorecard Method: This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-moneyvaluation of the target. The Venture Capital Method.
Ah, but today’s Internet companies have real revenue! Responses ranged from, “hey, they’re in a HUGE market&# to “it is an amazing company and their technology rocks.&# For others it feels like a two-speed economy, where rules apply to hot tech startups that don’t apply elsewhere. and profits!
AGILEVC My idle thoughts on tech startups. Now that Google’s acquisition of ITA is closed, following lenghty FTC review, it would appear Kayak is poised to proceed with their IPO in the coming months. =. Financial Snapshot: 2010 Revenue: $170 million. Revenue growth: 51% YoY (2010), 1% YoY (2009), 131% YoY (2008).
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.
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.
The Risk Factor Summation Method the fifth methodology for estimating the pre-moneyvaluation of pre-revenue companies we have described in recent posts. Technology risk. For more information on determining the average valuations in your area, see the Scorecard Method. million pre-moneyvaluation.
We recently started a series of posts on establishing the pre-moneyvaluation 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-moneyvaluation for investment purposes.
As I think about how to make money in this competitive environment and where to make new investments, I keep coming back to the thought that there is still opportunity very early or very late in a company’s life cycle. Witness the recent Sungard deal and others. If the private investors are willing and able to pay $11.3b
I’ve been writing up reviews of this season’s Shark Tank pitches from a silicon valley VCs perspective. They won a design award at a trade show, but have no revenue and no orders. Doing the research to form your own view of a company’s prospects is called duediligence. BACK 9 DIPS.
You can find this in a number of places, but in a nutshell, I prefer to invest in highly-scalable, technology-based ventures, with a particular focus on platforms, at a very, very early stage (but, oxymoronically, where there is already some type of traction). But the good thing is that this is where you can call in some reinforcements.
At today's roundtable we had some interesting companies and a lot of fundraising discussions, and I will review them shortly. Before I do, however, I want to talk about a thumb rule that I'd like to propose to entrepreneurs about raising money. Sub-$2 million pre-money, it is better to bootstrap.
We recently started a series of posts on establishing the pre-moneyvaluation of pre-revenue startup companies for purposes of investment by seed and startup investors. Dave Berkus is a founding member of the Tech Coast Angels in Southern California, a lecturer and educator. Add to Pre-moneyValuation.
They allow you to hire more people, purchase new technology, and establish new business connections, among many other benefits. Proposed private equity deal: Eventually, this business will require private equity to provide sufficient funding to develop some of the more robust aspects of the technology that will attract Fortune 500 clients.
As I think about how to make money in this competitive environment and where to make new investments, I keep coming back to the thought that there is still opportunity very early or very late in a company’s life cycle. Witness the recent Sungard deal and others. If the private investors are willing and able to pay $11.3b
I’m posting my analysis of the most interesting story of Shark Tank season 4 episode 7 over there, and reviewing the rest of the pitches here. The company sought to raise $125,000 for 25% of the comapny, implying a $375,000 premoneyvaluation. The entrepreneurs dithered for a moment at the valuation.
I wassurprised recently when I realized that all the worst problems wefaced in our startup were due not to competitors, but investors.Dealing with competitors was easy by comparison. There never has to be atime when you have no revenues. The contacts and advice can be more important than the money. Whendel.icio.us
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-moneyvaluation of about $4MM. stake in the company. The Consideration of Risk.
AGILEVC My idle thoughts on tech startups. Silicon Valley is still emerging from the tech bubble and massive downturn of late 2000-2002. LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point.
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