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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.
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.
Valuation negotiations between entrepreneurs and investors are often contentious. Such valuations rarely stray from the $1 million to $3 million range for seed/startup companies that angels expect to grow to $50 million to $100 million over five to eight years. Angels are most concerned about the management team's ability to rapidly grow the company and about helping the entrepreneur achieve these growth objectives.
As details regarding executive pay packages become more and more public, the best leaders are opting to make career choices that keep them out of the spotlight. This entrepreneur offers creative tips for finding and compensating the best executives in today's global marketplace.
Buyers and sellers of companies have different reasons for getting together.
Entrepreneurs looking for seed capital should consider Toronto TSX Venture Exchange's Capital Pool Company (CPC) program, which allows companies to go public by merging with a CPC.
London's Alternative Investment Market (AIM) is a credible alternative for U.S. companies looking for a market listing. As with any approach to IPO, U.S. companies should research AIM's advantages and disadvantages for listing compared with U.S. stock markets.
PIPES-or Private Investment in Public Equity-as a vehicle for companies to raise capital reverses the order of public filings from IPO or secondary offering. PIPES are a worthy alternative for raising public money but should be used selectively.
Looking at ways to do a public offering, the founders of a biotech company chose a reverse merger, an alternative public offering that ultimately provided the company with access to more funding sources and higher valuation.
Terry Bruggeman shares the tale of leading his life sciences company through the decision to obtain capital. After exploring the funding options, including VC and IPO, Bruggeman and his team decide to undertake a reverse merger.
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