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Spot on. We're at a 8 digit dollar valuation here after just 2 years of hard work and nobody knows yet - as we don't hang out on shiny conferences or court "pre

Spot on. We're at a 8 digit dollar valuation here after just 2 years of hard work and nobody knows yet - as we don't hang out on shiny conferences or court "prestigious" VCs but simply put the pedal to the metal from day one with a kick-ass team. Zero financing rounds and not a single name in our Crunchbase entry to date, and we'll come in with a bang one day. VCs were simply too slow to follow our pace so far (by now we grew out of their typical round size & target multiple) and we'll probably grow profitable without them. Sociomantic did the very same thing by the way and nobody was any wiser when they did a huge exit from nowhere. Thanks to the environment, it's still pretty easy to bootstrap in Berlin and go after alternative financing sources (it's starting to change though, starting at the rents). There's still the usual Rocket copycats and some interesting SV-style overhyped BS startups too by now that won't survive - but by and large Berlin has a lot of humble, technically excellent and hard working startups to offer. It's definitely going to survive the down-market to come.

bogomipz 10y ago
Awesome. This is really refreshing to hear. How did you go about determining your valuation though? What is it based on?
- throwaway1182 10y ago
  Sure. Although we have a rather nonstandard business area (not the usual ecommerce/saas/social/gaming stuff) and have no direct competitors, we could get a good grip at it by going down several routes: talking to industry experts, comparing indirect competitors' valuations and also by extrapolating from usual relevant business metrics such as current and projected revenue, traffic, margins, growth rates, and market size. We also talked to quite some VCs who confirmed our range to be pretty spot on in initial negotiations.
nugator 10y ago
Sounds cool, what are you working on? Would I, as a senior developer, understand your potential more than your standard VC?
- throwaway1182 10y ago
  Can't disclose for obvious reasons, but the potential isn't that hard to understand actually. Still, the first big unexpected hurdle was that VCs were totally "blinded" by their previous expertise. They tried to apply numbers from their well-known business areas (social / saas / ecommerce) to our model, which simply didn't fit our business case. So we went out and built the product and sold it to large clients anyway. Thing is: Our product by now outperforms the next best option for our clients by 100% with no alternatives or competitors in sight (it's a little niche-y, but still a multiple billion dollar market). With a product like that, the second thing that we didn't expect was that we tripped the "too good to be true" sensor everywhere, raising doubts. And when we were over it, VCs seemed to have an ego problem with being "too late", us not wanting to do a particularly large round, them not reaching their target multiple to save the fund, us being "too expensive already" or them always wanting to "advise" a team of industry veterans and second-time entrepreneurs that demonstrably knew better than them - instead of simply putting in their money and help with PR and their networks instead. Thing is: All investors say they want a great team, stellar culture, demonstrated product-market fit, fast execution, great technology and hockeystick growth. We brought it all to them and found out that if you know you have it and are asking a fair price for it, 99% of them are too scared to jump on board of a train that's already full steam ahead. They'd rather be the one discovering it. What I took from it is that awesome VCs are just as hard to find as awesome start-ups.
  - ujal 10y ago
    "We brought it all to them and found out that if you know you have it and are asking a fair price for it, 99% of them are too scared to jump on board of a train that's already full steam ahead. They'd rather be the one discovering it." -- Interesting. Have you tried to reach out to non-German VCs as well?
  - mahyarm 10y ago
    What are the obvious reasons you cannot say what your company is called or link to it's website?
    - 10y ago
ci5er 10y ago
> go after alternative financing sources What is an alternative financing source?
acchow 10y ago
> 8 digit dollar valuation > Zero financing rounds 8 digit valuation according to...whom?
- sangnoir 10y ago
  > 8 digit valuation according to...whom? You are right to doubt the valuation - in fact, you would be right to question any valuation, since all parties involved benefit from inflated valuations (to a point).
  - acchow 10y ago
    How does an investor benefit from overpaying for equity?
    - sangnoir 10y ago
      > How does an investor benefit from overpaying for equity? It's not overpaying if they know exactly what they are doing and why: they can afford to pay for an inflated valuation. Also, value is subjective. If you go down Sandy Hill doing valuations, you're bound to get wildly different values - which one would you consider "correct" or "overpaying"? Possible benefits, in no particular order: * Increases chances of startup accepting their investment. * Halo-effect on their investment. If $STARTUP is worth $X billion, then surely "they are onto something big". This in turn increases the chance of the startup succeeding * Prestige/profit. If you were publicly buying a painting for ap speculation/resale, surely you can afford to pay 10% extra if it increases the painting's percieved value by 30%. Now you own a painting that's worth 30% more than it's "real" value (had you not paid more) * fear of missing out on 'hot' startups.
      - acchow 10y ago
        I humbly suggest that the wildly varying values you get on Sand Hill is from varying beliefs, not a conspiracy or a scam. VC's generally don't invest in snake oil or try to pawn off snake oil.
shin_lao 10y ago
Hello, >We're at a 8 digit dollar valuation here after just 2 years of hard work and >Zero financing rounds Are a contradiction. Valuation isn't something you come up with your executive team or your accountant, it's the number that is deduced from an investmenet or an acquisition. Also, valuation is by no way a measure a success, the real measure of success for a company is the amount of profit.
- coryl 10y ago
  There's no rule to how to calculate valuation. You can take your profit numbers and run them against a multiplier based on industry. Ex. using an average of the profit to valuation ratio of the next 3 competitors. That would be a generally fair assessment of valuation, and shows how one can calculate valuation without direct investment by an outside party.
  - Scarblac 10y ago
    But they aren't profitable yet. How does that work with negatives?

bogomipz 10y ago

Awesome. This is really refreshing to hear. How did you go about determining your valuation though? What is it based on?

throwaway1182 10y ago
Sure. Although we have a rather nonstandard business area (not the usual ecommerce/saas/social/gaming stuff) and have no direct competitors, we could get a good grip at it by going down several routes: talking to industry experts, comparing indirect competitors' valuations and also by extrapolating from usual relevant business metrics such as current and projected revenue, traffic, margins, growth rates, and market size. We also talked to quite some VCs who confirmed our range to be pretty spot on in initial negotiations.

nugator 10y ago

Sounds cool, what are you working on? Would I, as a senior developer, understand your potential more than your standard VC?

throwaway1182 10y ago
Can't disclose for obvious reasons, but the potential isn't that hard to understand actually. Still, the first big unexpected hurdle was that VCs were totally "blinded" by their previous expertise. They tried to apply numbers from their well-known business areas (social / saas / ecommerce) to our model, which simply didn't fit our business case. So we went out and built the product and sold it to large clients anyway. Thing is: Our product by now outperforms the next best option for our clients by 100% with no alternatives or competitors in sight (it's a little niche-y, but still a multiple billion dollar market). With a product like that, the second thing that we didn't expect was that we tripped the "too good to be true" sensor everywhere, raising doubts. And when we were over it, VCs seemed to have an ego problem with being "too late", us not wanting to do a particularly large round, them not reaching their target multiple to save the fund, us being "too expensive already" or them always wanting to "advise" a team of industry veterans and second-time entrepreneurs that demonstrably knew better than them - instead of simply putting in their money and help with PR and their networks instead. Thing is: All investors say they want a great team, stellar culture, demonstrated product-market fit, fast execution, great technology and hockeystick growth. We brought it all to them and found out that if you know you have it and are asking a fair price for it, 99% of them are too scared to jump on board of a train that's already full steam ahead. They'd rather be the one discovering it. What I took from it is that awesome VCs are just as hard to find as awesome start-ups.
- ujal 10y ago
  "We brought it all to them and found out that if you know you have it and are asking a fair price for it, 99% of them are too scared to jump on board of a train that's already full steam ahead. They'd rather be the one discovering it." -- Interesting. Have you tried to reach out to non-German VCs as well?
- mahyarm 10y ago
  What are the obvious reasons you cannot say what your company is called or link to it's website?
  - 10y ago

ci5er 10y ago

> go after alternative financing sources What is an alternative financing source?

acchow 10y ago

> 8 digit dollar valuation > Zero financing rounds 8 digit valuation according to...whom?

sangnoir 10y ago
> 8 digit valuation according to...whom? You are right to doubt the valuation - in fact, you would be right to question any valuation, since all parties involved benefit from inflated valuations (to a point).
- acchow 10y ago
  How does an investor benefit from overpaying for equity?
  - sangnoir 10y ago
    > How does an investor benefit from overpaying for equity? It's not overpaying if they know exactly what they are doing and why: they can afford to pay for an inflated valuation. Also, value is subjective. If you go down Sandy Hill doing valuations, you're bound to get wildly different values - which one would you consider "correct" or "overpaying"? Possible benefits, in no particular order: * Increases chances of startup accepting their investment. * Halo-effect on their investment. If $STARTUP is worth $X billion, then surely "they are onto something big". This in turn increases the chance of the startup succeeding * Prestige/profit. If you were publicly buying a painting for ap speculation/resale, surely you can afford to pay 10% extra if it increases the painting's percieved value by 30%. Now you own a painting that's worth 30% more than it's "real" value (had you not paid more) * fear of missing out on 'hot' startups.
    - acchow 10y ago
      I humbly suggest that the wildly varying values you get on Sand Hill is from varying beliefs, not a conspiracy or a scam. VC's generally don't invest in snake oil or try to pawn off snake oil.

shin_lao 10y ago

Hello, >We're at a 8 digit dollar valuation here after just 2 years of hard work and >Zero financing rounds Are a contradiction. Valuation isn't something you come up with your executive team or your accountant, it's the number that is deduced from an investmenet or an acquisition. Also, valuation is by no way a measure a success, the real measure of success for a company is the amount of profit.

coryl 10y ago
There's no rule to how to calculate valuation. You can take your profit numbers and run them against a multiplier based on industry. Ex. using an average of the profit to valuation ratio of the next 3 competitors. That would be a generally fair assessment of valuation, and shows how one can calculate valuation without direct investment by an outside party.
- Scarblac 10y ago
  But they aren't profitable yet. How does that work with negatives?