Comments on: How do we set the valuation for a seed round?

By: Sharel

Sharel — Sun, 24 Jan 2010 08:10:15 +0000

Thank you Nivi, you guys rock!

By: Nivi

Nivi — Sun, 24 Jan 2010 00:07:50 +0000

There’s no hard rule. Understand that you will have multiple rounds and dilution in each round. Understand that the founders will need enough equity to stay motivated after the Series C. Chris Dixon previously commented that he sold something like 50% of the business in the first round of SiteAdvisor and he was glad for it.

By: Sharel

Sharel — Sat, 23 Jan 2010 22:06:06 +0000

Hi Nivi,

Can you please provide more details for: why in seed founding I shouldn’t sell more then 20% of the company. e.g., if we get the sum we need to reach a meaningful milestone, for 30% – and the valuation makes sense – why is that a problem?

Thanks.

By: SCeo

SCeo — Thu, 08 May 2008 12:48:47 +0000

Great timely article. The convertible debt is something that seems very common and easy, but for many experienced angel investors, not an attractive option. I’ve gotten feedback from a few angels that said that even with the discount, it isn’t worth it and that they would rather invest in Series A.

Another comment was that with a convertible, the company and the angels are at odds. The angels want a low Series A valuation, thus they get more equity, while the founders/company want a high Series A valuation, thus give away less to the angels/series A investors.

How does one get around this? Any other interesting structures out there?

By: Randall

Randall — Mon, 21 Apr 2008 22:19:30 +0000

Nice article, thanks! The presentation did a great job of expressing the idea in a little dance number.

This could be useful for helping calculate a dollar figure:
http://www.caycon.com/valuation.php

By: David

David — Mon, 21 Apr 2008 02:14:57 +0000

The valuation information I’m still digesting. The video I’ve played 5 times in a row now. Thanks!

By: Josh

Josh — Fri, 18 Apr 2008 16:08:28 +0000

The Ewing Marion Kauffman Foundation has a great set of articles on this very topic that are worth checking out.

By: Nivi

Nivi — Fri, 18 Apr 2008 09:23:59 +0000

Hey Thomas, YC combines low valuations with low dilution and high value add. It’s a reasonable combination! =)

By: Nivi

Nivi — Fri, 18 Apr 2008 09:22:00 +0000

Good idea Dharmesh. We’ll revisit it — we need to take a fresh look at it.

We previously wrote about the pros and cons of convertible debt here: http://venturehacks.com/term-sheet-hacks#convertible-debt

By: linkblog: Apr 17 | Jackson Miller

linkblog: Apr 17 | Jackson Miller — Fri, 18 Apr 2008 07:00:41 +0000

[...] Venture Hacks — How do we set the valuation for a seed round? [...]