Startup Funding Espresso -- Climbing the Valuation Wall
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Negotiating the valuation of a startup between the CEO and the investors is a major step in funding. An equity terms sheet requires coming to an agreement on the valuation which determines how much ownership is given to the investor. Both startup and investor must now \u2018climb the valuation wall.\u2019 Be prepared for the ensuing negotiation and the back and forth. It can be difficult to assign values when there is no product or revenue.\xa0 One solution to this situation is to delay setting the valuation until you have the right investor AND the right time. Switch to a convertible note -- a debt instrument that converts to equity later.\xa0 Because it\u2019s in debt form, there\u2019s no valuation. Later when there\u2019s a team in place, a product built, and a revenue stream defined, it will be much easier to negotiate the valuation. Don\u2019t put the valuation negotiation on the first step as it\u2019s high a wall to climb. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group