Founder’s Pocket Guide: Raising Angel Capital

The Art of Startup Fundraising takes a fresh look at raising money for startups, with a focus on the changing face of startup finance. New regulations are making the old go-to advice less relevant, as startup money is increasingly moving online. These new waters are all but uncharted—and founders need an accessible guide. This book helps you navigate the online world of startup fundraising with easy-to-follow explanations and expert perspective on the new digital world of finance. You'll find tips and tricks on raising money and investing in startups from early stage to growth stage, and develop a clear strategy based on the new realities surrounding today's startup landscape.

The finance world is in a massive state of flux. Changes are occurring at an increasing pace in all sectors, but few more intensely than the startup sphere. When the paradigm changes, your processes must change with it. This book shows you how startup funding works, with expert coaching toward the new rules on the field.

Don't rely on the "how we did it" tales from superstar startups, as these stories are unique and applied to exceptional scenarios. The game has changed, and playing by the old rules only gets you left behind. Whether you're founding a startup or looking to invest, The Art of Startup Fundraising provides the up-to-the-minute guidance you need.

Sharing his twenty-year track record helping thousands of investors, practitioners, and entrepreneurs measure and realize high-growth venture, author Lorenzo Carver draws on real-world cases from investors, founders, and advisors to illustrate how each corporation was impacted by valuations. By putting these techniques into a context and framework, Venture Capital Valuation simplifies them so that anyone founding, running, and investing in these innovative companies can apply them immediately.

Featuring a companion website where readers can access and download additional case study material, as well as different valuation materials mentioned throughout the text, Venture Capital Valuation explores:

An invaluable resource for anyone who wants to make the most out of their investments, Venture Capital Valuation shows business appraisers and venture capitalists how to maximize their returns and avoid losing money—before the damage becomes irreparable.

·     The Startup Valuation Explorer

·     Expanded coverage of Valuation Methods

·     Responding to investor questions about your valuation

·     Understanding option pool impact on your valuation

For many early-stage entrepreneurs assigning a pre-money valuation to your startup is one of the more daunting tasks encountered during the fundraising quest. This guide provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by-step examples for several valuation methods.

This Founder’s Pocket Guide helps startup founders learn:

•          What a startup valuation is and when you need to start worrying about it.

•          Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.

•          How investors view the valuation task, and what their expectations are for early-stage companies.

•          How the valuation fits with your target raise amount and resulting founder equity ownership.

•          How to do the simple math for calculating valuation percentages.

•          How to estimate your company valuation using several accepted methods.

This guide provides a framework and process to help startup founders answer this common question.

Equity ownership affects the culture and sense of wellbeing of a startup. Founders typically sacrifice a great deal of other life opportunities to work on a startup effort. In exchange for that sacrifice, a founder wants to feel the ownership equation with any co-founders is fair.

In detail, this Founder’s Pocket Guide walks entrepreneurs though the following elements:

• Take The Founder Test to make sure everybody deserves founder status 

• Review the case for splitting your founder equity into equal parts

• Use the Equity Split Scorecard as a fair method to allocate more equity to highly skilled cofounders

• Solve common equity problems using founder vesting structures

• Answer common equity split questions like IP and founder-investors

Note that this guide does not go into how to use equity to attract employees or using equity to pay service providers, advisors, development companies, or other contractors. This guide focuses solely on the best practices of deciding the equity ownership split between the founders of a startup venture.

Valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. In The Little Book of Valuation, expert Aswath Damodaran explains the techniques in language that any investors can understand, so you can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and pick stocks.

Page by page, Damodaran distills the fundamentals of valuation, without glossing over or ignoring key concepts, and develops models that you can easily understand and use. Along the way, he covers various valuation approaches from intrinsic or discounted cash flow valuation and multiples or relative valuation to some elements of real option valuation.

Written with the individual investor in mind, this reliable guide will not only help you value a company quickly, but will also help you make sense of valuations done by others or found in comprehensive equity research reports.

Expanding on these key skills every startup founder should know, this Founder’s Pocket Guide helps you learn how to:

•          Build your basic cap table step by step, including founder’s shares, option pools, angel investor rounds, and VC rounds.

•          Decipher cap table specific lingo, such as fully-diluted shares outstanding, preferred shares vs. common shares, Series A, Series B, and so on.

•          Establish a stock option pool in your cap table and understand the option pool effect on founder dilution.

•          Understand the simple math behind cap table formulas and calculations, including calculating fully diluted shares outstanding, investor equity ownership percentages, and share price.