Let’s Avoid Being Valued! ×  Bootstrap

×  Family Money

×  Friends & Family Money

×  Strategic Source of Money

GOOD LUCK!! But, sometimes that is a wrong strategy

Early-stage companies.. ×  hard to value – for anybody.

×  important to arrive at a ``correct” valuation ×  Define what is ``correct”?

×  One that leads to having best chance of getting funded at the next round,

×  One that keeps both hands clapping together ×  One that attracts the right kind of capital source

×  One that weeds out the wrong kind of entrepreneur

Research Comparables ×  I don’t pay attention to how much P/E multiples you will

have in year 4 or 5 or 7. If you already can know that … god bless you. It is not a VC kind f funding opportunity

×  Research comparable start-ups in similar domain and be realistic in attaching premiums for experienced team, etc.

Understand Psychology of Investors

×  If investors don’t make money, neither will you.

×  Dilution, Risk, Rewards, Control Premium etc. ×  Company needs total investment of 500 crore, 50 crore or 5

crore? What should be its first round valuation? ×  How much potential risk is there? ×  How much potential reward is there?

×  Portfolio effect ×  8 out of 10 fails. Ok! but, mine is a surefire winner!!!

Love Complexity? ×  Convertible debt (with or without cap on valuation)

×  Valued at next round with discounts given

×  Milestone driven future adjustments to valuations

×  Home run clause As investor, I like to keep things simple. Either we agree on valuation or we go our own ways!!

Bottomline!!