Early Stage Angel Round Valuations

I’m getting a lot of questions these days about early round valuations – specifically for angel rounds.  While these vary over time, and by segment, most of them tend to settle into a pretty tight range for early stage angel investments.  I’ve talked about the different approaches – either a “convertible debt” or a “light preferred”in the past.  I’ve also stated that I prefer the light preferred approach.

So – assuming you are doing a light preferred – what is a fair price?  I’ve been doing these types of investments for the past 12 years and I’ve investment in companies where the pre-money valuation has ranged from $250k to $5m and the amount raised has ranged from $50k to $2m.  While there are obviously some outliers, the normal range seems to be $1m to $2.5m pre for up to a $1m investment.  I’ve seen this reinforced recently with a number of deals done in this range.