pre-money - The 411 On Startups (tm)

The Pre-money vs. Post-money Confusion With Convertible Notes – Feld Thoughts

Jul

2015

The other day, Mark Suster wrote a critically important post titled One Simple Paragraph Every Entrepreneur Should Add to Their Convertible Notes. Go read it – I’ll wait. Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the ...

Valuation and Option Pool — Understand the trade off

May

2012

One of the more contentious things in the negotiation between an entrepreneur and a VC over a financing, particularly an early stage financing, is the inclusion of an option pool in the pre-money valuation. As my friend Mark Pincus likes to say, “it’s just another way to lower the price”. I’ll accept that critique. And ...

Current Pre-money Valuations of Pre-revenue Companies

May

2012

I just returned from the 2011 Angel Capital Association Summit in Boston, April 4-6, 2011. It was attended by over 500 angels and associates, including about 60 international angel leaders. It was an excellent meeting – the best yet of the half-dozen or so US ACA angel Summits to date. On Wednesday afternoon, I was ...

Option Pool, Post-Money and True Pre-Money. Trade Pool for Valuation.

May

2012

One of the common areas of misunderstanding, and therefore conflict, in financing negotiations has to do with the relationship between the pre-money valuation and the option pool. Investors want the company to have an adequate option pool for future hiring and it is customary to include the pool in the pre-money valuation. Some entrepreneurs see ...

Venture Hacks Series A Cap Table, with Note Conversion and Option Pool

Apr

2012

This is a Youtube video explanation of a cap (capitalization) table example that is available online. It may take a while get your head around the terminology and concepts involving the option pool and note conversion, and their impact on valuation. It is worth taking time to understand this if you want to see how ...

The Option Pool Shuffle: Beat the game and raise your valuation

Aug

2008

Summary: Don’t let your investors determine the size of the option pool for you. Use a hiring plan to justify a small option pool, increase your share price, and increase your effective valuation.

The 411 On Startups ™

The Pre-money vs. Post-money Confusion With Convertible Notes – Feld Thoughts

Valuation and Option Pool — Understand the trade off

Current Pre-money Valuations of Pre-revenue Companies

Option Pool, Post-Money and True Pre-Money. Trade Pool for Valuation.

Venture Hacks Series A Cap Table, with Note Conversion and Option Pool

The Option Pool Shuffle: Beat the game and raise your valuation