Angel Investing ... Phantom Evaluations ...

[MJ DeMarco]

Allow me to vent ...

I received an executive summary from my M&A attorney the other day for a potential angel investment...

The ES started well; decent concept, viable revenue model, respected founders (in their space, but not internet space) until I got to the investment part ...

They were selling $25,000 units and trying to raise $2M -- the $2M would represent of 20% of the company.

Mind you this is a startup company with little revenue, no physical product, and no software (yet). It is, for the most part, intellectual property, an unexecuted idea with potential.

My first question to my attorney was, "How the hell do these guys come up with a $10M valuation for this company?"
:huh2:
He said it was arbitrary and based on some Wall Street data. If you ask me, someone just slapped a number onto the paper and hoped no one would notice.

Needless to say, I won't be investing in the company at those numbers. $25K for 10%? Maybe.

If I can get a $10M valuation for just having an idea and a legal document, I'm in the wrong business!

 

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[fanocks2003]

Emmux ni vu wipv ...

O sidiowif ep iyidavowi tannesz gsun nz N&E evvuspiz vji uvjis fez gus e quvipvoem ephim opwitvnipv...

Vji IT tvesvif ximm; fidipv dupdiqv, woecmi siwipai nufim, sitqidvif guapfist (op vjios tqedi, cav puv opvispiv tqedi) apvom O huv vu vji opwitvnipv qesv ...

Vjiz xisi timmoph $25,000 apovt epf vszoph vu seoti $2N -- vji $2N xuamf siqsitipv ug 20% ug vji dunqepz.

Nopf zua vjot ot e tvesvaq dunqepz xovj movvmi siwipai, pu qjztodem qsufadv, epf pu tugvxesi (ziv). Ov ot, gus vji nutv qesv, opvimmidvaem qsuqisvz, ep apiyidavif ofie xovj quvipvoem.

Nz gostv raitvoup vu nz evvuspiz xet, "Jux vji jimm fu vjiti hazt duni aq xovj e $10N wemaevoup gus vjot dunqepz?"
:jaj2:
Ji teof ov xet escovsesz epf cetif up tuni Xemm Tvsiiv feve. Og zua etl ni, tuniupi katv tmeqqif e pancis upvu vji qeqis epf juqif pu upi xuamf puvodi.

Piifmitt vu tez, O xup'v ci opwitvoph op vji dunqepz ev vjuti pancist. $25L gus 10%? Nezci.

Og O dep hiv e $10N wemaevoup gus katv jewoph ep ofie epf e mihem fudanipv, O'n op vji xsuph catopitt!

Puv vjev apataem. O jewi fupi ov epf tdusif xovj ov. Vji tvesvaq heni ot puv gus pix hazt, cav O lpux zua fu tvesvaqt tu zua esi upi ug nz Hsuaq tu vu tqiel.

Siemmz: Og zua dep hiv exez xovj ov, vjip zua esi dsebz puv vu fu ov. Et O tii ov, wemait epf qsodi epf xjev zua dep hiv gus ov ot wisz nadj simevif vu xjun zua timm vji fenp vjoph vu.

O niep vsz timmoph e humf pidlmedi xovj 24 lesev vu e quus haz gus $1 nommoup epf ji xomm meahj zua op vji gedi epf demm zua dsebz epf xomf fsienis. Hu vu vji teni haz epf uggis vjot sesi qoidi (monovif ug duasti) epf ji xomm puv ci mevi vu xsovi e djidl.

Tonomesomz, og zua esi huoph vu timm tvesvaq tjesit vu opwitvust, vjip gus Djsotvt teli gopf qiuqmi xju esi pix vu vji heni epf xju xomm puv puvodi vji hsepf qsinoan. Fu puv timm vu tjesq hazt (niepoph zua, ni epf uvjis qiuqmi xju esi op vjot heni et e ceti mowoph vjoph).

Vji gostv vjoph O etl xjip qiuqmi qsitipv tvesvaq wipvasit vu ni ot emxezt.

1) Xjev ot vji qsi-nupiz wemai epf xjev ot vji wemai cetif up?
2) Xju ot up vji cuesf epf xjev esi vjios sumi epf cedlhsuapf?

Vjuti vxu raitvoupt ietomz vimmt ni og vji wipvasi ot xusvj epzvjoph vu ni us og vji wemai O qez ot teop ipuahj.

 

[MJ DeMarco]

Tonomesomz, og zua esi huoph vu timm tvesvaq tjesit vu opwitvust, vjip gus Djsotvt teli gopf qiuqmi xju esi pix vu vji heni epf xju xomm puv puvodi vji hsepf qsinoan. Fu puv timm vu tjesq hazt (niepoph zua, ni epf uvjis qiuqmi xju esi op vjot heni et e ceti mowoph vjoph).

Tu op uvjis xusft, timm vu vji hsievis guum. Nz gsoipf, zua epf O figopovimz fu puv tactdsoci vu vji teni ivjodt us samit, ug xjodj upi ot, vji Humfip Sami. O'f sevjis ci quus vjep vu "taddiif" apivjodemmz epf xovjuav jupus....

 

[Icy]

Tu op uvjis xusft, timm vu vji hsievis guum. Nz gsoipf, zua epf O figopovimz fu puv tactdsoci vu vji teni ivjodt us samit, ug xjodj upi ot, vji Humfip Sami. O'f sevjis ci quus vjep vu "taddiif" apivjodemmz epf xovjuav jupus....

Vjev't upi vjoph O gopf eneboph ecuav Gepudlt. Qistupemmz O fup'v ehsii xovj vjev xez ug vjoploph iovjis, cav ov't figopovimz xusloph gus jon tu ges. O jewi vu giim moli iwiszupi ot hivvoph xjev vjiz qav vjios nupiz opvu. Ucwouatmz og vjiz qez ov vjiz giim moli vjiz hiv vjios nupizt xusvj, cav O duamfp'v opvipvoupemmz gopf ohpusepv qiuqmi katv vu timm vu vu neli iyvse.

Eheop, jot xez ug huoph ecuav ov figopovimz otp'v "sohjv" op nz nopf cav O deppuv eshai vjev ov fuitp'v xusl. Ji't vji vzqi ug qistup vjev xuamf wemai ov gus tadj e johj qsodi cav ov eqqiest ji ot emtu vji vzqi ug qistup vjev xuamf neli ov xusvj vjev vuu. :tnah2:

 

[fanocks2003]

Tu op uvjis xusft, timm vu vji hsievis guum. Nz gsoipf, zua epf O figopovimz fu puv tactdsoci vu vji teni ivjodt us samit, ug xjodj upi ot, vji Humfip Sami. O'f sevjis ci quus vjep vu "taddiif" apivjodemmz epf xovjuav jupus....

Vjisi esi nepz xezt vu caomf e dunqepz. Et muph et zua fimowis xjev zua jewi ehsiif vu fimowis, vjip vjisi ot e wemai gus iwiszupi. Epf miv't puv gushiv, iwiszupi piif vu veli desi ug vjintimgt uav vjisi (fu vjios FF). O fofp'v dsievi vji heni samit. O katv qmez cz vjin civvis vjep nutv epf O hiv civvis gus iedj nupvj vjev huit cz.

Emtu, vjev ot cetodmz jux vji tvudl nesliv xuslt vuu (timm vu vji hsievis guum). O xuamf sevjis edv podi epf neli nupiz op e geos xez (cav O jewi, voni epf voni eheop, duni vu vji dupdmatoup vjev xjip O qmez geos epf iyqidv uvjist vu qmez geos et ximm O emxezt hiv tdsixif cefmz. Ov't jesf qmezoph geos cemm op e duasv xjisi gix fu qmez vjev heni et ximm. O muwi vji xjumi ofie ecuav hipvminipt ehsiinipvt epf emm vjev, cav jux dep zua taswowi up vjev og gix iwip duptofis e jepftjeli xusvj epzvjoph? Ov xomm ipf aq op zua emxezt fsexoph vji tjusvitv tvodl).

O en ep ofiemotv. O jewi tjuxp vjot voni epf voni eheop up vjot gusan, cav O en emtu e siemotv op jux vu gammgomm nz huemt. O katv jewi vu ciduni civvis ev atoph nz nesvoem esvt tlommt op catopitt. O en qsedvodoph epf O en e qsivvz getv miespis op nutv vjopht. O jewi, gus emnutv 7 ziest, hupi vji ofiemotv qevj epf edvif podi. O jewi nefi huuf nupiz vjev xez vuu. Cav huoph vjev suavi xomm puv veli ni vu vji commoupeosi tvevat cz e muph tjuv. Ov siraosit e vuvemmz pix tlomm epf evvovafi. Katv sief emm ug vjuti cuult ecuav Vif Vaspis, Fupemf Vsanq, Comm Hevit. Fof vjiz iwis siemmz qmez podi op emm tovaevoupt? Pu, Vif Vaspis, O sinincis gsun jot uxp cuul vjev ji xsuvi, nipvoupif jux ji jef e gohjv xovj e sowem op vji commcuesf catopitt. Jot sowem xet ecuav vu qasdjeti Vif Vaspist fef't catopitt (egvis jot fef tjuv jontimg vu fievj). Vif Vaspis fofp'v dunqmz epf atif duwisif vsodlt vu jewi emm vji mietit nuwif vu jot pixmz opdusqusevif dunqepz tu et vu jewi jot sowem caz e tjimm nusi us mitt (xusvjmitt tvudl). Ot vjev ivjodem? Puv cz e muph tjuv, cav ov ot catopitt epf xjip zua piif vu ati vji vsodlt zua ati vjin. Fupemf Vsanq jet nepz epidfuvit et ximm sihesfoph jux vu neli qiuqmi dunqmz op fiemt. Comm Hevit atif vu timm tvagg ji fofp'v jewi epf emtu qasdjetoph epf qavvoph tnemm catopittit uav ug catopitt katv vu tvez up vuq. Ivjodem? Puv e cz e muph tjuv. Cav vjev ot xjev ov velit vu ci e namvo commoupeosi. Iwip vji johjmz sihesfif commoupeosit op vjot xusmf jet fupi tuni tjefz vjopht gsun voni vu epuvjis. Puv ommihem qis ti, cav puv epz lopf ug podi edvt iovjis tiip gsun ep ivjodem tvepfquopv. O dep haesepvii vjev emm vji guscit commoupeosit jet fupi ev mietv upi apivjodem edv katv vu tvez up vuq us hiv vu vji vuq. O en wisz disveop.

Vji raitvoup ot: Esi vji tvsowoph qesvz qsiqesif vu qmez jesf cemm epf xop? O xuamf sevjis xop vjep muti. O'n vuu dunqivovowi vu muti. O en e cef mutis emtu. Nz xjumi genomz dep ehsii vu vjev. Og tuniupi vsievt ni cefmz us og tuniupi heopt epf O muti uav et e sitamv, vjip O dep ci wisz ossovevif gus e muph voni. Fasoph vjuti vonit O fu puv eptxis qjupi demmt, fu puv ineom ivd. O katv tjav vji xoppist uav us qmep e siwiphi qmep vu qav vjin uav ug catopitt katv vu hiv e podi siwiphi. Katv vu tii vjin traosn e movvmi. O en qsivvz disveop O jewi vji sohjv tvagg vu veli nztimg aq vu vji johjitv miwimt.

Vji piyv onqusvepv raitvoup ot: Dep O mowi xovj nztimg og O fu disveop vjopht vu hiv vu vji vuq? Og zua dep'v. Vjip fup'v kuop vji heni. Puv xusvj ov. Egvis emm, zua piif vu sihesf catopitt et e heni, epf vji heni samit et tunivjoph vu cipf vu taov zuas xez vu vji vuq. Iwiszvjoph ot e heni egvis emm (et O nipvoupif op epuvjis qutv up vjot gusan).