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Valuation terms<br />
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<li>Full dilution: Full dilution counts not only shares that have been issued but also all shares that would be issued if all options and warrants were exercised and other promises or contingent agreements to issue shares were given effect.</li>
<li>Investors’ (initial) percent ownership: The percentage of a company’s full dilution shares that the investors own, at the time of investment, including the shares issued to the investors.</li>
<li>Money: The amount of capital being invested in the round.</li>
<li>Post-money valuation: Post-money valuation is computed by dividing the money by the investors’ percentage of ownership.</li>
<li>Pre-money valuation: Pre-money valuation is computed by subtracting the money from the post-money</li>
</ul>
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Warrants: The investors may get warrants (or non-qualified options) to purchase additional shares. The factors to consider:</div>
<div>
<ul style="text-align: left;">
<li>Warrant coverage: How many additional shares the investors can purchase relative to the number of shares they purchase outright—10 percent, 30 percent, or even 100 percent.</li>
<li>Strike price: Relative to the price of the underlying security the investors get.</li>
<li>Stock choice: Whether the warrants are to purchase <b>common stock or preferred stock</b>.</li>
<li>Warrant life in years: This varies but can be, for example, one, five, or ten years.</li>
<li>Kicker versus substantive change: Warrants can provide a small “kicker” (5 percent coverage with a one-year warrant, for example) or can materially affect the valuation (100 percent coverage with ten-year warrants).</li>
<li>Effect on the valuation: You need to consider the time cost of money since warrants need not be exercised (converted to shares) until a much later date</li>
</ul>
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VC industry follows the power curve - s<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;">implistically, the best investment returns more money than the rest of the investments combined.</span><span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"> </span></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"><br /></span></div>
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<img alt="top1001" src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1001.jpg" height="374" width="640" /></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;">Top VCs</span></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"><br /></span></div>
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<a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/toptech3.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img alt="top1002" border="0" src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" height="384" width="640" /></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><br /></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 17.7777786254883px; line-height: 23.3766231536865px;">The next chart breaks down the top 15 investors based on the stage they invested in the companies.</span></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/toptech3.jpg" height="392" width="640" /></a></div>
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</div>
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Valuation terms<br />
<br />
<br />
<ul style="text-align: left;">
<li>Full dilution: Full dilution counts not only shares that have been issued but also all shares that would be issued if all options and warrants were exercised and other promises or contingent agreements to issue shares were given effect.</li>
<li>Investors’ (initial) percent ownership: The percentage of a company’s full dilution shares that the investors own, at the time of investment, including the shares issued to the investors.</li>
<li>Money: The amount of capital being invested in the round.</li>
<li>Post-money valuation: Post-money valuation is computed by dividing the money by the investors’ percentage of ownership.</li>
<li>Pre-money valuation: Pre-money valuation is computed by subtracting the money from the post-money</li>
</ul>
<div>
<div>
Warrants: The investors may get warrants (or non-qualified options) to purchase additional shares. The factors to consider:</div>
<div>
<ul style="text-align: left;">
<li>Warrant coverage: How many additional shares the investors can purchase relative to the number of shares they purchase outright—10 percent, 30 percent, or even 100 percent.</li>
<li>Strike price: Relative to the price of the underlying security the investors get.</li>
<li>Stock choice: Whether the warrants are to purchase <b>common stock or preferred stock</b>.</li>
<li>Warrant life in years: This varies but can be, for example, one, five, or ten years.</li>
<li>Kicker versus substantive change: Warrants can provide a small “kicker” (5 percent coverage with a one-year warrant, for example) or can materially affect the valuation (100 percent coverage with ten-year warrants).</li>
<li>Effect on the valuation: You need to consider the time cost of money since warrants need not be exercised (converted to shares) until a much later date</li>
</ul>
<div>
VC industry follows the power curve - s<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;">implistically, the best investment returns more money than the rest of the investments combined.</span><span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"> </span></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"><br /></span></div>
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<img alt="top1001" src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1001.jpg" height="374" width="640" /></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;">Top VCs</span></div>
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<span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 18.1818180084229px; line-height: 23.3766231536865px;"><br /></span></div>
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<a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/toptech3.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img alt="top1002" border="0" src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" height="384" width="640" /></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><br /></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="background-color: white; color: #333333; font-family: ff-tisa-web-pro, Georgia, 'Times New Roman', Times, serif; font-size: 17.7777786254883px; line-height: 23.3766231536865px;">The next chart breaks down the top 15 investors based on the stage they invested in the companies.</span></a><a href="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/top1002.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img src="http://www.cbinsights.com/blog/wp-content/uploads/2014/03/toptech3.jpg" height="392" width="640" /></a></div>
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