Archive for the 'Valuation' Category

Startup Valuations: The Dave Berkus Method

February 14 2011 No Commented

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 Berkus is a founding member of the Tech Coast Angels in Southern California, a lecturer and educator.  He has invested in more than 70 startup ventures.   Dave’s valuation model […]

Startup Valuations: The Venture Capital Method

February 5 2011 18 Commented

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.  The Venture Capital Method (VC Method) was first described by Professor Bill Sahlman at Harvard Business School in 1987 in a case study and has been revised since.  It is […]

Startup Valuations: The Scorecard Method

January 31 2011 2 Commented

Wise entrepreneurs and investors use multiple methodologies to establish the appropriate pre-money valuation for pre-revenue startup companies, because no single method is particularly effective at this early stage.  Valuation at the time of investment, of course, is critical in determining the percentage of ownership that investors purchase from entrepreneurs in a round of investment.   I […]

Interview by Frank Peters

January 13 2011 No Commented

I was recently interviewed on The Frank Peters Show  We discussed my five-month visit to New Zealand during the first half of 2010 and the new workshop I developed since returning entitled Valuation of Early Stage Companies.  Frank drills down on many valuation issues important to entrepreneurs and investors alike. Here is Frank’s lead to […]

A New ACEF Valuation Workshop for Angels and Entrepreneurs

December 4 2010 No Commented

In September, I mentioned I spent my summer developing a new ½-day workshop for the Angel Capital Education Foundation on establishing the pre-money valuation of pre-revenue startup companies.  This workshop has now been delivered several times to rave reviews from audiences of entrepreneurs and angel investors.  Let me tell you a little about it. The […]

Valuation of Pre-revenue Angel Deals

September 23 2010 one Commented

I spent my summer developing a new ½ day workshop on the valuation of pre-revenue start-up companies for angel investors and entrepreneurs.  It is now complete and will be delivered in Tucson, Grand Forks, ND and Philadelphia in the next six weeks.  This was a volunteer project I completed for the Angel Capital Education Foundation. […]

How Much Ownership do Angels Require?

June 1 2010 one Commented

How Much Ownership do Angels Require? A frequent question from entrepreneurs is “how much ownership do angels expect to purchase with their investment in my start-up venture?” First, a reminder:  Angels are investors, not bankers.  So, in most cases angels purchase equity in new ventures, and are not lending funds to entrepreneurs, in anticipation that […]

Angels: Convertible Debt Is Seldom the Right Security for Startup Investments

December 23 2009 No Commented

Angels:  Convertible Debt Is Seldom the Right Security for Startup Investments Just after the Internet bubble burst in 2001, many of us angels were “crammed down” unmercifully by subsequent investors in our portfolio companies.  These new investors were funding our companies at valuation far below the pricing we had agreed to earlier, resulting in substantial […]

Valuations are down during this recession!

November 20 2009 No Commented

Valuations are down during this recession! The pre-money valuation of a new venture is the valuation just before an investor writes a check. The post-money valuation is the valuation of the startup just after investors checks are cashed for a given round of investment. Therefore: The pre-money valuation plus the invested monies equals the post-money valuation. The pre-money […]