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You sell at the Series A raise timing in parallel with raising your A round.
by hkmurakami 8y ago
You sell at the Series A raise timing in parallel with raising your A round.
- gnicholas 8y agoDo you mean "valuation" instead of "raise"? Otherwise I don't understand this sentence. If this is what you meant, $38M still seems like a pretty lofty pre-money valuation!
- nostrademons 8y agoHe means that while you are talking to investors, you should be simultaneously shopping the company around to potential acquirers. Basically, you're asking the investors "How much would you pay for 33% of the company?" and you're asking the acquirers "How much would you pay for 100% of the company?" Their offers then serve as a floor - and potential bidding war - for each other. If an acquirer offers you $20M for the company but an investor offers you $5M on $10M pre, you tell the investor "Well, we have an acquisition offer for $20M, it doesn't make sense for us to do a deal at less than $20M pre." If an investor offers you $15M on $30M pre but the acquirer offered you $20M, you tell the acquirer "Well, we have a termsheet that values the company at $30M, we'll stay independent unless you can beat that." All firms are, of course, able to up their offer to try and beat the competition.