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When Valuation Doesn’t MatterLee HowerBoston Angel Boot Camp (June 2010)
VALUATION ALWAYS MATTERS IF… Investing in mid-late stage startups 2 CONFIDENTIAL - DO NOT DISTRIBUTE
VALUATION ALWAYS MATTERS IF… Investing in very small number of startups (n<5) 3 CONFIDENTIAL - DO NOT DISTRIBUTE
So when does it NOT matter? 4 CONFIDENTIAL - DO NOT DISTRIBUTE
If investing in portfolio (n>10) of seed / early stage startups  5 CONFIDENTIAL - DO NOT DISTRIBUTE
… doesn’t matter as much as most people think 6 CONFIDENTIAL - DO NOT DISTRIBUTE
7 CONFIDENTIAL - DO NOT DISTRIBUTE EXAMPLE 1: CAPITAL EFFICIENT WIN ,[object Object]
Angels “bid” is $2M pre-money
Acme Corp founders’ “ask” is $4M pre-money,[object Object]
Gets acquired for $50M w/o raising additional capital
If angels paid $2M pre  >16x return
If angels paid $3M pre  >12x return
If angels paid $4M pre  10x return,[object Object]
10 CONFIDENTIAL - DO NOT DISTRIBUTE EXAMPLE 2:  DOWNSIDE Worst case scenario… lose all your invested capital

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Lee Hower - June 2010