Angel and VC Evaluations
A Recent Online Question
ROIs for Angel / VC investments
1) I've heard several angels and VCs say that they will typically value pre-revenue companies between $500-$2mm pre money valuation. What I haven't heard, is what the criteria is though. Is it just a general feeling for how well the company will do based on the idea, or is it actually a discounted present value calculation of some sort.
2) Could you please either explain the following, or point to web resources / blogs that talk about how the dilution process occurs from round to round in a funding.
Example: Round 1, pre money valuation of $500k, I raise $250k, and now retain 67% of the company. Round 2: I raise $1mm. What do you think would happen in terms of the percentage I'd retain, and what happens to the 33% that the first round investor owned?
Thanks in advance, and please let me know if I didn't phrase my question clearly enough.
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