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How to increase your valuation by reducing risk       

Berkonomics

Why reduce investor risk? In the creation of a young company, there are five principal risks to be addressed by the entrepreneur. Professional investors will probe these five risk areas and make the decision to invest based upon comfort with each. First: Product risk. Second: Market risk.

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A Founder's Guide to Notes & SAFEs: Caps, Discounts & More

Dream It

Both notes and SAFEs are fairly easy instruments to put together, they both (kind of) defer the valuation discussion, and investors can lock in an investment more easily at an earlier stage and price. A convertible note is a loan that typically converts into shares of preferred stock during your next equity financing.

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The Berkus Method: Valuing an Early-Stage Investment

Berkonomics

Because the Internet has such a long memory and documents from the distant past can be found with ease, a search the “The Berkus Method” today will yield several conflicting valuations culled from the many subsequent publications of the method over the ensuing years. How do you value pre-revenue companies?

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Why We’re Looking to Fund Stuff With More Meaning

Both Sides of the Table

If you’re funding the same stuff as everybody else and if you started your activities when the clues were obvious you’re much less likely to drive enormous returns. I know – I was there when the first people debating funding it at less than a $5m valuation. Venture Capital is a tricky industry. Far from it.

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Fauxmentum

Both Sides of the Table

Startup companies continue to grow at unprecedented rates, raise enormous amounts of venture capital and achieve valuations that imply that they will continue to grow rapidly for the foreseeable future. I’m not saying don’t hire sales staff or market your products aggressively. We live in heady times.

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What is the Right Burn Rate for your Startup?

Both Sides of the Table

That is, how much should your company be willing to lose in cash every month as you make investments in staff and equipment that funds technology, sales, marketing and management. Gross burn is your cost base and net burn is the difference between your revenue and costs.

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Disproportionate Risk

This is going to be BIG.

One of the top reasons why I personally turn a deal down is when there seems to be a disproportionate amount of risk left on the table. Venture is extremely risky, but the reason why it works is because of the risk/return tradeoff. You can’t make return unless you take risk—as a finance guy, I understand that. That’s pretty big.