UC 270 Lecture Notes - Lecture 14: Startup Company, Angel Investor, Crowdfunding
Document Summary
Not all startups can or should raise money. The vast majority will never raise money. Raise money to start/grow, share risk, and add value. Can be difficult, time-consuming and distracting for an early-stage company. Raise funding from a number of individuals. May be within a venture fund or big company. Significant growth in this class, many well-established groups. Can require extensive management of many investors. Can mean some loss of control for founders. Corporations, pension, endowment, individuals, family offices, foundations. Debt that will convert into equity with a qualifying equity round. May have a valuation cap (convert at lower of priced round and cap) Generally takes longer, costs more, more complex. Pre-money valuation is the value (negotiated) of the company before investment. Post-money valuation is the value after investment (post-money = pre-money + investment) Pre-money valuation = share price *pre money shares. % owned = investment / post-money valuation.
