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When I did the "valuation" on my startup for crowd-funding (Seedrs), when it was nothing more than a wire-frame and an idea in my head (and an MBA research proj

When I did the "valuation" on my startup for crowd-funding (Seedrs), when it was nothing more than a wire-frame and an idea in my head (and an MBA research project, but you almost make me feel like I should be ashamed to admit that or something), I just did it based approximately on the valuations that various accelerator-type programmes (including YC) were giving. I came up with 14% for £30k, giving a valuation of £214k. Low enough to get investment fairly quickly - nobody complained. How on earth are you meant to do a books-based valuation of an early-stage pre-revenue company? You have to give a specific valuation so people know what they are getting.

vladimirralev 13y ago
Just google it. There are many methods to do valuation of startups. And again, you can not issue stock options without IRS-supervised valuation. Most startups on the website are post-seed with more than 3 people on the team already BTW. So it's pointless to discuss pre-seed valuation at all. Whatever numbers you have in your valuation I need to know how you got them to decide if it makes sense. (Edit: You may be from the UK, so it's a little different than US. I was speaking for the US case here.)
- irollboozers 13y ago
  You're mistaken, almost all of them are seed-stage, minus one. You can issue stock whenever you want. But I realize that your point is that you'd prefer due diligence and transparency on terms before using a site like WeFunder. The thing is, most investments at that stage don't have that much due diligence beyond market size, team, and traction. I think this is where you're misunderstanding.
  - vladimirralev 13y ago
    You're mistaken. Most of these companies are raising >500K, this is not seed money. Seed is typically less than 100K. There are at least 10 companies that come from YC, which means they already got their seed round. You can't do seed twice by definition.
    - irollboozers 13y ago
      There is no definition of 'seed', so I'm not sure where you're getting these ideas. Seed is just pre-Series A. I am a YC W13 founder and I just raised a 'seed' round. Our investors signed the paperwork as a 'seed' round. We raised >$500k.
      - vladimirralev 13y ago
        That would be highly unusual. But it doesn't matter that much to me if it's true. We were simply talking about different thing when saying "seed". No harm done. http://www.investopedia.com/terms/s/seedcapital.asp http://www.investopedia.com/terms/s/seedcapital.asp
- bebefuzz 13y ago
  That's why companies use convertible notes. While the cap is a proxy for valuation, there is no issued stock options until the note converts to equity in a priced round.

vladimirralev 13y ago

Just google it. There are many methods to do valuation of startups. And again, you can not issue stock options without IRS-supervised valuation. Most startups on the website are post-seed with more than 3 people on the team already BTW. So it's pointless to discuss pre-seed valuation at all. Whatever numbers you have in your valuation I need to know how you got them to decide if it makes sense. (Edit: You may be from the UK, so it's a little different than US. I was speaking for the US case here.)

irollboozers 13y ago
You're mistaken, almost all of them are seed-stage, minus one. You can issue stock whenever you want. But I realize that your point is that you'd prefer due diligence and transparency on terms before using a site like WeFunder. The thing is, most investments at that stage don't have that much due diligence beyond market size, team, and traction. I think this is where you're misunderstanding.
- vladimirralev 13y ago
  You're mistaken. Most of these companies are raising >500K, this is not seed money. Seed is typically less than 100K. There are at least 10 companies that come from YC, which means they already got their seed round. You can't do seed twice by definition.
  - irollboozers 13y ago
    There is no definition of 'seed', so I'm not sure where you're getting these ideas. Seed is just pre-Series A. I am a YC W13 founder and I just raised a 'seed' round. Our investors signed the paperwork as a 'seed' round. We raised >$500k.
    - vladimirralev 13y ago
      That would be highly unusual. But it doesn't matter that much to me if it's true. We were simply talking about different thing when saying "seed". No harm done. http://www.investopedia.com/terms/s/seedcapital.asp http://www.investopedia.com/terms/s/seedcapital.asp
bebefuzz 13y ago
That's why companies use convertible notes. While the cap is a proxy for valuation, there is no issued stock options until the note converts to equity in a priced round.