Comments on: How to pump up your VC valuation http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/ Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley Thu, 22 Dec 2011 18:28:02 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Best Paul Graham Essays, Articles, Startup Stories, Advice for startups [live list] [80] | iamstarting - talks with Indian founders. http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-1013 Best Paul Graham Essays, Articles, Startup Stories, Advice for startups [live list] [80] | iamstarting - talks with Indian founders. Tue, 24 May 2011 09:24:03 +0000 http://mattbartus.com/?p=169#comment-1013 [...] Is OverHow to pick a co-founderHow to Work with Lawyers at a StartupThe Founders’ Pie Calculator How to pump up your VC valuationIf You Build It, They Will Abuse ItThe Best Single Piece Of Advice For New Entrepreneurs HBS Startup [...] [...] Is OverHow to pick a co-founderHow to Work with Lawyers at a StartupThe Founders’ Pie Calculator How to pump up your VC valuationIf You Build It, They Will Abuse ItThe Best Single Piece Of Advice For New Entrepreneurs HBS Startup [...]

]]> By: Best Paul Graham Essays, Articles, Startup Stories, Advice for startups [live] | iamstarting - talks with Indian founders. http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-1012 Best Paul Graham Essays, Articles, Startup Stories, Advice for startups [live] | iamstarting - talks with Indian founders. Tue, 24 May 2011 09:21:41 +0000 http://mattbartus.com/?p=169#comment-1012 [...] Is OverHow to pick a co-founderHow to Work with Lawyers at a StartupThe Founders’ Pie Calculator How to pump up your VC valuationIf You Build It, They Will Abuse ItThe Best Single Piece Of Advice For New Entrepreneurs HBS Startup [...] [...] Is OverHow to pick a co-founderHow to Work with Lawyers at a StartupThe Founders’ Pie Calculator How to pump up your VC valuationIf You Build It, They Will Abuse ItThe Best Single Piece Of Advice For New Entrepreneurs HBS Startup [...]

]]> By: Matt Bartus http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-21 Matt Bartus Sun, 11 Apr 2010 20:56:32 +0000 http://mattbartus.com/?p=169#comment-21 Not exactly the same position in the upside scenario, because the <br>investor needs to pay to exercise. So as I mentioned above, this is <br>the same as raising more money at the higher valuation. However, I <br>totally get and appreciate your comment about focus on valuation at <br>the expense of other possibly more important items. Not exactly the same position in the upside scenario, because the
investor needs to pay to exercise. So as I mentioned above, this is
the same as raising more money at the higher valuation. However, I
totally get and appreciate your comment about focus on valuation at
the expense of other possibly more important items.

]]> By: Matt Bartus http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-115 Matt Bartus Sun, 11 Apr 2010 20:56:32 +0000 http://mattbartus.com/?p=169#comment-115 Not exactly the same position in the upside scenario, because the <br>investor needs to pay to exercise. So as I mentioned above, this is <br>the same as raising more money at the higher valuation. However, I <br>totally get and appreciate your comment about focus on valuation at <br>the expense of other possibly more important items. Not exactly the same position in the upside scenario, because the
investor needs to pay to exercise. So as I mentioned above, this is
the same as raising more money at the higher valuation. However, I
totally get and appreciate your comment about focus on valuation at
the expense of other possibly more important items.

]]> By: Brad Hargreaves http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-20 Brad Hargreaves Sun, 11 Apr 2010 10:58:18 +0000 http://mattbartus.com/?p=169#comment-20 But in the "upside scenario", the founders are in the exact same position, right? The warrants will be exercised and the investors will have the same share they would have had at a lower valuation. <br><br>But in a "sideways" scenario, giving away warrants in exchange for a higher valuation will increase the risk of a down round, which is decidedly negative. <br><br>I totally agree that startups should absolutely try to negotiate as best as they possibly can with investors. I've just seen many startups unhealthily focus on the valuation versus things such as the liquidation preference or board control. But in the “upside scenario”, the founders are in the exact same position, right? The warrants will be exercised and the investors will have the same share they would have had at a lower valuation.

But in a “sideways” scenario, giving away warrants in exchange for a higher valuation will increase the risk of a down round, which is decidedly negative.

I totally agree that startups should absolutely try to negotiate as best as they possibly can with investors. I've just seen many startups unhealthily focus on the valuation versus things such as the liquidation preference or board control.

]]> By: Brad Hargreaves http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-114 Brad Hargreaves Sun, 11 Apr 2010 10:58:18 +0000 http://mattbartus.com/?p=169#comment-114 But in the "upside scenario", the founders are in the exact same position, right? The warrants will be exercised and the investors will have the same share they would have had at a lower valuation. <br><br>But in a "sideways" scenario, giving away warrants in exchange for a higher valuation will increase the risk of a down round, which is decidedly negative. <br><br>I totally agree that startups should absolutely try to negotiate as best as they possibly can with investors. I've just seen many startups unhealthily focus on the valuation versus things such as the liquidation preference or board control. But in the “upside scenario”, the founders are in the exact same position, right? The warrants will be exercised and the investors will have the same share they would have had at a lower valuation.

But in a “sideways” scenario, giving away warrants in exchange for a higher valuation will increase the risk of a down round, which is decidedly negative.

I totally agree that startups should absolutely try to negotiate as best as they possibly can with investors. I've just seen many startups unhealthily focus on the valuation versus things such as the liquidation preference or board control.

]]> By: Matt Bartus http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-19 Matt Bartus Sun, 11 Apr 2010 08:09:14 +0000 http://mattbartus.com/?p=169#comment-19 Brad, while I understand the risk of a flat or down round, I don't <br>think this justifies not trying to negotiate the best valuation <br>reasonably available under the circumstances (and taking into account <br>who you are raising from, etc.). This suggestion is meant to provide <br>one form of a bridge between the valuation expectations of the company <br>and the investor. I also don't believe you should negotiate from a <br>position of "assume the worst" in the future. Thanks for your comment. Brad, while I understand the risk of a flat or down round, I don't
think this justifies not trying to negotiate the best valuation
reasonably available under the circumstances (and taking into account
who you are raising from, etc.). This suggestion is meant to provide
one form of a bridge between the valuation expectations of the company
and the investor. I also don't believe you should negotiate from a
position of “assume the worst” in the future. Thanks for your comment.

]]> By: Matt Bartus http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-113 Matt Bartus Sun, 11 Apr 2010 08:09:14 +0000 http://mattbartus.com/?p=169#comment-113 Brad, while I understand the risk of a flat or down round, I don't <br>think this justifies not trying to negotiate the best valuation <br>reasonably available under the circumstances (and taking into account <br>who you are raising from, etc.). This suggestion is meant to provide <br>one form of a bridge between the valuation expectations of the company <br>and the investor. I also don't believe you should negotiate from a <br>position of "assume the worst" in the future. Thanks for your comment. Brad, while I understand the risk of a flat or down round, I don't
think this justifies not trying to negotiate the best valuation
reasonably available under the circumstances (and taking into account
who you are raising from, etc.). This suggestion is meant to provide
one form of a bridge between the valuation expectations of the company
and the investor. I also don't believe you should negotiate from a
position of “assume the worst” in the future. Thanks for your comment.

]]> By: Brad Hargreaves http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-18 Brad Hargreaves Sun, 11 Apr 2010 03:51:13 +0000 http://mattbartus.com/?p=169#comment-18 Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Increased valuation isn't necessarily a good thing in and of itself. Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Increased valuation isn't necessarily a good thing in and of itself.

]]> By: Brad Hargreaves http://www.mattbartus.com/how-to-pump-up-your-vc-valuation/#comment-111 Brad Hargreaves Sun, 11 Apr 2010 03:51:13 +0000 http://mattbartus.com/?p=169#comment-111 Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Increased valuation isn't necessarily a good thing in and of itself. Interesting strategy, although I don't know if it justifies the added risk of having a flat (or down) round next time you go to raise. Increased valuation isn't necessarily a good thing in and of itself.

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