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Investment Valuations of Seed- and Early-Stage Ventures
Villalobos Luis
7/1/2007
Article Resource
Summary:

This exceptional article offers insightful explanation and key details of how angel investors determine valuations, why entrepreneurs and investors often have different perspectives for angel returns, and what steps angels and entrepreneurs can take to quickly find common ground on this critical topic.

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Startup Pre-money Valuation: The Keystone to Return on Investment
Payne William H Bill Villalobos Luis
7/1/2007
Article Resource
Summary:

Investing in seed and startup companies is extremely risky: Angel investors typically realize about 85 percent of their total portfolio returns from 15 percent of their portfolio companies. Consequently, angels look only for companies that can grow rapidly. Entrepreneurs who pursue less aggressive growth are unlikely to attract angel investors.

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Valuation of Pre-revenue Companies: The Venture Capital Method
Payne William H Bill
7/1/2007
Article Resource
Summary:

This informative piece explains a well-known method that venture capitalists use to determine "post-money valuation," which is a company's valuation at the time of investment. Perhaps more important, it provides valuable insights into why the returns expected by investors are often perceived as "too high" by entrepreneurs.

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Valuation Worksheet
7/1/2007
File Resource
Summary:

During a round of investment in seed- (start-up) and early stage companies, angel investors typically invest from $25,000 to $100,000 each. The round usually totals between $250,000 and $1 million, and the company valuations run from $1 million to $3 million. Collectively, the angels purchase from 20 to 40 percent of a company’s equity and seek a return of 20-30x over five years.

Since the Internet bubble burst, the pre-money valuations of seed-stage companies by venture capitalists have averaged between $1 million and $3 million. Angel investors tend to participate at earlier investment stages than VCs, so pre-money valuations for angel deals nearly always fall into this admittedly wide range. What factors within this range impact the valuation of a specific company?

The accompanying Valuation Worksheet provides entrepreneurs and investors with an empirical basis for deciding if a start-up company should be valued near the top or bottom of the range. It’s not designed to be used for definitive valuation calculations.

The Valuation Worksheet lists major factors and key issues to consider in judging the value of a seed (start-up) company. Note the following features:

  1. The major factors are listed roughly in order of importance.
  2. Each major factor has been assigned a weighted ranking. For example, the “Strength of the Management Team” is worth 30 percent while “Sales Channels” are worth 10 percent. Investors put greater emphasis on the management team and the size of the opportunity than they do other factors.
  3. Within each major factor, the impact of each issue has been assigned a valuation ranking from +++ (very positive) to - - - (very negative), to assist the investor decide the overall weighted ranking to be assigned to the valuation. Some factors, such as the size of the opportunity (scalability) and coachability of the entrepreneur, can be deal killers.

Entrepreneurs can use the worksheet to gain insights into what investors are looking for in a fundable seed-stage company and to identify factors that justify higher pre-money valuations. The worksheet is also a roadmap on how entrepreneurs can improve the fundability of their enterprises and increase the pre-money valuation.

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Better Beginnings
7/12/2007
Summary:

Getting ready to do your first presentation to a VC or angel? A good beginning leads to a happy ending. An experienced speaker and writer provides entertaining and useful advice on why your business presentations should open with a spark instead of a spreadsheet.

Go To Source (headrush.typepad.com)
Financing an Acquisition
7/12/2007
Summary:

This well-written article gives practical advice on how to think about acquisitions and five no-nonsense tips on how to do them productively for all concerned.

Go To Source (www.entrepreneur.com)
The Entrepreneurial Mind: Short-cut to Trouble
8/9/2007
Summary:

Are your startup financials accurate? Odds are they are not, perhaps significantly so, because you have not spent the necessary time and effort forecasting revenues. This article explains why revenues, not expenses, are the most important--and difficult--numbers to get right.

Go To Source (forum.belmont.edu)
The Best Funding Source for You
8/16/2007
Summary:

This article provides an excellent framework not only for how to raise money but also for how to think about raising money. Key point: Always stay nine months ahead of your need for cash.

Go To Source (www.entrepreneur.com)
Entrepreneurial Thought Leader Series
Orr Dominic
10/17/2007
VideoSeries Resource
Summary:

Dominic Orr was named President and CEO of Aruba Networks in April 2006. Prior to that, Mr. Orr served as the company's Chairman of the Board. Previously, Dominic Orr was the president of Nortel Networks, Intelligent Internet Web Systems. He previously served as the president and chief executive of Alteon WebSystems which was merged with Nortel Networks in Oct. 2000. Mr. Orr has more than 20 years of experience in the computer systems and communication networking industry and has held senior positions at Bay Networks, Hewlett-Packard and Hughes Aircraft. Mr. Orr. is a member of the Sciences Board of Visitors at UCLA. He holds a BS in physics from City University of New York and a MS and PhD from California Institute of Technology.

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Negotiation Course
Christensen Stan Springer Dan
11/12/2007
VideoSeries Resource
Summary:

Dan Springer brings over 20 years of executive leadership and strategic sales and marketing consulting experience to Responsys, with proven success in interactive marketing, e-commerce, and finance. As Chief Executive Officer, Dan is responsible for charting Responsys' strategic direction and extending the company's leadership into new realms of digital marketing. Prior to Responsys, Dan was Managing Director in the San Francisco office of Modem Media where he was responsible for general management of the agency's western United States operations. Dan led the development of the agency's Performance Marketing capability by leveraging database marketing, web site analytics and search engine marketing techniques. Prior to Modem Media as the CEO of Telleo, Inc., he refocused the business from online advertising to business partnerships with leading brands like Taco Bell. Previously, Springer was also the Chief Marketing Officer and General Manager for NextCard, where he built the fastest-growing credit card in history by creating one of the Internet's top five advertisers. He started his career as a consultant at McKinsey & Company and DRI/McGraw-Hill. Dan holds an MBA from Harvard University and a BA in Mathematics and Economics from Occidental College. He also sits on the board of directors for ITI, E-LOAN and The Randall Museum.

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