3 ms·
5% is high. If the Series A rounds were 1 on 3 ($1M on $3M pre-money valuation), then $150k would get him 3.75%. For hotter startups, 1 on 4 or 5 might actual
by webwright 16y ago
5% is high.
If the Series A rounds were 1 on 3 ($1M on $3M pre-money valuation), then $150k would get him 3.75%. For hotter startups, 1 on 4 or 5 might actually happen. Presumably they would have the option to put more in, but that would increase their basis.
But your assessment is right. Average time to liquidity for a VC backed startup is 7+ years-- older than the oldest YC company, right? There is a TON of value locked in in previous YC companies.
- jaxn 16y agoAccording to the article, the average YC company raises $700k in seed funding. Assuming your $3M pre is correct, that would be about 18% total and 4% for the $150k investor. The question is, does a quick and easy $150k delay fundraising until a company is looking at a $6M pre? For the super hot ones I bet it does. For those startups that are more worried about not getting early traction they probably won't delay fundraising. So if we are going to throw a number around... my fuzzy math says 2% of the hottest companies and 4% of the others.
- mlinsey 16y agoThe first post-YC fundraising is usually made up of convertible notes. So in your example, that $700K at $3M pre would not trigger the conversion of Start Fund's note, which would instead convert at the valuation of the next round of fundraising.