Let’s Avoid Being Valued!× Bootstrap× Family Money× Friends & Family Money× Strategic Source of MoneyGOOD LUCK!! But, sometimes that is a wrong strategy
Early-stage companies..× hard to value – for anybody.× important to arrive at a ``correct” valuation × Define what is ``correct”? × One that leads to having best chance of getting funded at the next round, × One that keeps both hands clapping together × One that attracts the right kind of capital source × One that weeds out the wrong kind of entrepreneur
Research Comparables× I don’t pay attention to how much P/E multiples you will have in year 4 or 5 or 7. If you already can know that … god bless you. It is not a VC kind f funding opportunity× Research comparable start-ups in similar domain and be realistic in attaching premiums for experienced team, etc.
Understand Psychology of Investors× If investors don’t make money, neither will you.× Dilution, Risk, Rewards, Control Premium etc. × Company needs total investment of 500 crore, 50 crore or 5 crore? What should be its first round valuation? × How much potential risk is there? × How much potential reward is there?× Portfolio effect × 8 out of 10 fails. Ok! but, mine is a surefire winner!!!
Love Complexity?× Convertible debt (with or without cap on valuation)× Valued at next round with discounts given× Milestone driven future adjustments to valuations× Home run clause As investor, I like to keep things simple. Either we agree on valuation or we go our own ways!!