When In Doubt on Pre-Money Valuation, Smart Guys Procrastinate

http://vcexperts.com/vce/library/encyclopedia/documents_view.asp?document_id=1360

by vcexperts • 17 years ago

14 3 17 years ago

jhancock• 17 years ago

I've seen this technique applied recently. The founders had plenty of people interested in the angel round. Yet, they refused to put a price on the investment, deferring it to a future funding event. Even many savvy investors that understood why they were doing this and found the contracts to be clean, decided not to invest as the founders were saying "I need $x hard cash from you now and some time in the future you will know what percent of the company that translates to." It may be a good way to go, but its a hard way. Its much easier to be prepared to name your price, raise only what you need and live with it.

holaamigos• 17 years ago

Convertible debt sucks for angel investors, they are taking far more risk than the VCs but are only getting a 20 to 30 percent discount.

ALee• 17 years ago

Nowadays though, convertible debt actually has a pre-money valuation tied to it and is just a faster financing mechanism.

When In Doubt on Pre-Money Valuation, Smart Guys Procrastinate

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