Compliance, Start Ups

10 Great Quora Answers on Valuation & Venture Capital

By Dan Eyman

November 08, 2016

I was answering some Quora questions recently on valuation when I started to look around the site to see if there were any other good questions and answers on valuation, venture capital, startup fundraising etc….here is what caught my eye in no particular order:

What are the best ways to manage relationships with VC contacts prior to fundraising?

This question and the answers are a little dated but the advice still remains relevant. My favorite answers are from Mark Suster and Phineas Barnes. However I found Keith Rabois’ answer, who basically says to ignore them, refreshing. Guess it just depends on how you see it.  Have a look for yourself.

How should a startup choose between taking a top tier VC at a $15m pre-money valuation or a second tier VC at a $25m pre-money valuation? 

This is an interesting question and I have my own opinion which I will spare you from but have a read for yourself. All kinds of good advice up in here!

Are Series A – C considered “early stage”?

I thought this was an interesting question however I think most of the answers kinda suck. My answer, which I will post later on Quora to the question is… YES…….you are still an early stage company even at a Series C round. I would go further and say even if you make it public you are still an early stage company in ways but the company just carries less risk than a startup backed by a Series X (fill in the blank) round. Try to keep in mind that there are public companies that have been listed for more than 100 years and many public companies that could buy most startups in the blink of an eye because they have so much cash…..so yeah…still “early stage”

When raising a Series A, what are common mistakes that first timers make?

No particular favorite here but I thought the question was a good one. More here. 

What are the top venture capital firms?

The real answer is whichever one helps your company the most…. LPs and VCs will tell you top means capital returned, generally.  Entrepreneurs will cite top in an entirely different way. Neither are wrong. You Decide.

Are startup valuations region dependant or not?

Different opinions here but my experience is that they are in fact region dependent up until a point. If you are in a hot startup city then you will most likely be able to raise at a higher valuation then if you are elsewhere. I know that it should not really make a difference and in an ideal world would only depend on traction, etc….but we don’t live in a perfect world…more here

How does 409A evaluate a 1 year old VC backed Series A early startup’s valuation?

Far and away the best answer comes from me 🙂  Read more.

How do VCs calculate valuations?

There is a lot of answers here, 23 total. I think there is some good here and some not so good. The real answer is that most of them look to what others in the space are doing, where public multiples fall and will take a multiple of forward looking revenue. Anyone who says the way VCs calculate value is complicated is lying to you. You decide

Y Combinator: What are the pros and cons of YC’s SAFE securities versus convertible notes?

I liked the start of the first answer:

“My initial reaction is that anything being marketed with an acronym SAFE is dangerous to one or both parties (investor/entrepreneur).

After having read SAFE PRIMER from Safe Financing Documents I actually like it.” more here

What does a VC want to see in a cap table?

This is a great question that I have answered before. Patrick Mathieson from Toba Capital has a great answer. Read it here.


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