Comments on: Term Sheet: Price

By: VCwords.com-KeepingChinaGreat.com / Term Sheet: 定价（Price）

VCwords.com-KeepingChinaGreat.com / Term Sheet: 定价（Price） — Thu, 03 Dec 2009 03:10:48 +0000

[...] 原文作者：Brad Feld [...]

By: Michael Blake

Michael Blake — Mon, 02 Apr 2007 22:41:23 +0000

For what it’s worth from a guy working in valuation, I typically advise early stage clients not to get too worked up over valuation, unless they have multiple sources of capital. I routinely turn away such clients because although I’d be delighted to take their money, they’d really be no better off after having obtained an appraisal report (and investors would likely dismiss it anyway). As the blog mentions, the only real leverage you have in valuation is to establish an auction, and that will more or less set the price anyhow.

I’d offer an alternative view on issuing warrants, however. Warrants are tricky, (particularly if you value the warrants directly) but as someone mentioned in a comment, valuation of preferred stock is at least equally tricky. At least with warrants, you can pretty much assume full dilution to the common and fairly simply estimate the appropriate share price. The place where we see people get tripped up is they give away WAY too many warrants because they treat their value as de minimis.

Preferred stock valuation requires fairly complex option pricing models (it’s incorrect to treat it as debt, as many even in the valuation field do) to figure out what the actual value/price is.

– mike

http://www.adamscapital.com
http://www.startuplounge.com

By: DAtum

DAtum — Fri, 07 Jan 2005 18:58:38 +0000

[Business] Financing for startups

I suppose that complexity is the real hurdle here. But at the risk of sounding juvenile, is accepting a lower valuation in exchange for no warrants a good thing?

By: Peter Hoskins' Blog

Peter Hoskins' Blog — Wed, 05 Jan 2005 22:15:36 +0000

Feld Thoughts: Term Sheet: Price

Link: Feld Thoughts: Term Sheet: Price.

By: Peter Hoskins' Blog

Peter Hoskins' Blog — Wed, 05 Jan 2005 22:15:36 +0000

Feld Thoughts: Term Sheet: Price

Link: Feld Thoughts: Term Sheet: Price.

By: Scott Loftesness

Scott Loftesness — Wed, 05 Jan 2005 02:39:33 +0000

Term Sheet Terms

Brad Feld of Mobius Venture Capital has posted a couple of great reads for entrepreneurs on his blog this week: Term Sheet: Price and Term Sheet: Liquidation Preference. Between Brad and David Hornik’s VentureBlog posts, there soon won’t be any

By: Scott Loftesness

Scott Loftesness — Wed, 05 Jan 2005 02:37:25 +0000

Term Sheet Terms

By: Brad Feld

Brad Feld — Tue, 04 Jan 2005 17:00:29 +0000

Unfortunately, in the case I was whining about, the folks involved were very sophisticated and had adequate counsel. They just chose to focus on things that were not very important. That said – your comments are on the money.

By: Conglomerate

Conglomerate — Tue, 04 Jan 2005 07:41:46 +0000

VC Term Sheets

Brad Feld, the Managing Director of Mobius Venture Capital and proprietor of the Feld Thoughts blog, has launched a series of posts on term sheets. If the first post is any indication, these will be very valuable….

By: Steve Shu

Steve Shu — Tue, 04 Jan 2005 02:12:08 +0000

Although I don’t have enough info to say, I wonder if the financing (say if a Series A round) was made difficult if the seller did not have adequate counsel and/or was unable to discern what current market conditions were (e.g., for ratchets, liquidation preferences, dividends). Sometimes sellers need to use informal networks to solicit for market condition information on valuation, allocation of stock option pool across senior management, etc.

By: John Furrier

John Furrier — Mon, 03 Jan 2005 20:49:26 +0000

VC Financing Term Sheet Postings Series

Another good post by Brad Feld, VC Blogger from Mobius.