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Ask YC: I'm pitching to an angel. How do I value my startup?

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Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#21

Post by hacker64 »

mig wrote: post #18
mattmaroon wrote: post #5

Earlier quoted context omitted.

I'd also shoot for more than a year's expenses. I've found investors like to hear you're aiming for 18-24 months. Consider that you have to essentially start seeking funding 6 months before running dry. If you aim for 1 year's expenses you work 6 months, then start on fundraising. Raise 18 months' expenses and you work for 12 before fundraising again, so you get double the progress for only 50% more money. And if you…

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

It's not easy, but it's doable. Asking for the numbers you're suggesting forces us to seek VC funding (which we might do later), but we're not ready for it yet.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#22

Post by jamiequint »

mig wrote: post #18
mattmaroon wrote: post #5

Earlier quoted context omitted.

I'd also shoot for more than a year's expenses. I've found investors like to hear you're aiming for 18-24 months. Consider that you have to essentially start seeking funding 6 months before running dry. If you aim for 1 year's expenses you work 6 months, then start on fundraising. Raise 18 months' expenses and you work for 12 before fundraising again, so you get double the progress for only 50% more money. And if you…

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

$100k is more than enough to sustain two founders for a year. Especially if the founders happen to be young and unmarried. If they were living together they could probably make it on expenses of $50k for a year while still living relatively comfortably (even at Silicon Valley prices).

Also, I'm not sure what to make of your comment "Two strong hackers, working for 6 months is eaily $140K expenses" How good the hackers is hardly related to the expenses they require. Perhaps 140k is the opportunity cost?

Having enough in the bank for 1-2 years is probably a good idea, but it sounds like they could do that on $250k-$350k.

Also, I agree with matt, focus on the percentage you are giving away rather than the amount you want to take.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#23

Post by iamelgringo »

brett wrote: post #17
iamelgringo wrote: post #7

[disclaimer]Mind you, I'm on the outside looking in. I really haven't started the startup funding shuffle yet, but I've read compulsively. And, this is what I've gleaned. YMMV.[/disclaimer] First, a few important questions. Do you have revenue? How many users? How fast have your been growing? Proprietary patentable technology, or a user focused tool built on open source? I'd say that how many people are on the team,…

I think you mean: value = $15000/20% = $75000 at the low end or value = $15000/5% = $300,000 at the high end

:) Yeah. I was tired when I wrote the post. Thanks.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#24

Post by mattmaroon »

skmurphy wrote: post #15
hacker64 wrote: post #6

Earlier quoted context omitted.

That's an interesting twist. Thanks. Is it common?

It may be common but the more important question the investor will have is how soon and for how much you can sell the company (in other words how will you use the funds to create more value / reduce risk in the startup). There will be other terms associated with a funding that will have a significant impact on how much you make when you sell (for a reasonable range of exits). A couple of good sites for background on…

No investor ever asks you "how soon and for how much can you sell the company." Ever. And if they do, go elsewhere.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#25

Post by tlrobinson »

mig wrote: post #18
mattmaroon wrote: post #5

Earlier quoted context omitted.

I'd also shoot for more than a year's expenses. I've found investors like to hear you're aiming for 18-24 months. Consider that you have to essentially start seeking funding 6 months before running dry. If you aim for 1 year's expenses you work 6 months, then start on fundraising. Raise 18 months' expenses and you work for 12 before fundraising again, so you get double the progress for only 50% more money. And if you…

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

YC tends to gives about $6K-10K per founder, which needs to last for at least 3 months or until they get more funding, unless they have other funds... and the funded companies seem to make it work...

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#26

Post by bayareaguy »

jamiequint wrote: post #22
mig wrote: post #18

Earlier quoted context omitted.

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

$100k is more than enough to sustain two founders for a year. Especially if the founders happen to be young and unmarried. If they were living together they could probably make it on expenses of $50k for a year while still living relatively comfortably (even at Silicon Valley prices). Also, I'm not sure what to make of your comment "Two strong hackers, working for 6 months is eaily $140K expenses" How good the hacker…

At $50K your taxes are going to be pretty low, but just the same try and have the company pay for things instead of buying them with your salary.

If you look around you may find a business partner who could give you some money as part of some kind of deal. Traditional software companies can do this by pre-selling licenses at a discount and web companies looking for ways to get more users may pay you if you find a way to help your users get signed up with them. However I'd caution against spending too much time on this sort of thing yourself as it can easily become a distraction.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#27

Post by nostrademons »

mig wrote: post #18
mattmaroon wrote: post #5

Earlier quoted context omitted.

I'd also shoot for more than a year's expenses. I've found investors like to hear you're aiming for 18-24 months. Consider that you have to essentially start seeking funding 6 months before running dry. If you aim for 1 year's expenses you work 6 months, then start on fundraising. Raise 18 months' expenses and you work for 12 before fundraising again, so you get double the progress for only 50% more money. And if you…

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

Grad students routinely live on less than $20K/year...

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#28

Post by far33d »

nostrademons wrote: post #27
mig wrote: post #18

Earlier quoted context omitted.

$100K is not enough to sustain two employees for an year. $50K is less than the annual average living expenses for a person. (Just do the Math, housing, insurance, etc.). I would strongggggggggly recommend to try raising something between 0.75M an 1M. I have noticed a lot of fellow hackers seriously undervaluing the time they spend building a product. Two strong hackers, working for 6 months is eaily $140K expenses(a…

Grad students routinely live on less than $20K/year...

they get insurance through school.

Re: Ask YC: I'm pitching to an angel. How do I value my startup?

#30

Post by [deleted] »

mattmaroon wrote: post #24
skmurphy wrote: post #15

Earlier quoted context omitted.

It may be common but the more important question the investor will have is how soon and for how much you can sell the company (in other words how will you use the funds to create more value / reduce risk in the startup). There will be other terms associated with a funding that will have a significant impact on how much you make when you sell (for a reasonable range of exits). A couple of good sites for background on…

No investor ever asks you "how soon and for how much can you sell the company." Ever. And if they do, go elsewhere.

[deleted]
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