IRS Circular 230 Disclosure: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in this communication, including any attachment to this communication, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to any other person any transaction or matter addressed herein. Startup Valuation: What are you worth? Palo Alto, San Francisco, Los Angeles [email protected] www.rogerroyse.com , ww.rroyselaw..com @rroyse00 roger.royse
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IRS Circular 230 Disclosure: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in this communication, including any attachment to this communication, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to any other person any transaction or matter addressed herein.
Startup Valuation:
What are you worth?
Palo Alto, San Francisco, Los Angeles [email protected] www.rogerroyse.com , ww.rroyselaw..com
@rroyse00 roger.royse
Roger Royse Royse Law Firm, PC
Palo Alto, San Francisco, Los Angeles [email protected] www.rogerroyse.com , ww.rroyselaw..com
@rroyse00 roger.royse
THE STARTUP TRIANGLE
PEOPLE
MONEY
TECHNOLOGY
2
FOUNDER’S EQUITY
The Grunt Fund Method
Equal Percentages
Subjective
Formula
3
Who should vest
How long?
Acceleration?
Change of control
Termination without
cause
Vesting
VESTING
4
ADVISOR
FAST Model
Valuation
Milestones and
Deliverables Vesting Stock v.
Options
5
Seed Funding
SEED FUNDING
SAFE Priced rounds Convertible Debt
6
7
Do I need a valuation for my option plan?
RSUs and Restricted Stock
Phantom Plans
OPTIONS AND 409A VALUE
VC or Institutional Investor Preferred Stock Valuation Methods
Score Card Venture Capital Method Berkus Method Cayenne Calculator Risk Factor Summation Negotiation
8
THE PRICED ROUND
THE PRICED ROUND
More Valuation Methods
(Patents + People) x $1
Million
Comparable
Discounted Cash Flow
Market Multipliers
Discount to Public
Companies
Startup Factor Method
9
www.startuprounds.com
VC NEGOTIATIONS
When to mention valuation
Staged Investment
Liquidation Preference
Control
Blocking rights
Drags and tags
10
EXIT VALUE
11
Preferences
Earn Outs
Reps & Warranties
Taxes
CONCLUSION
Startup Valuation
is an Art
Not a Science
12
RoyseLink: Connecting founders with investors and service partners.
Royse University: Providing business, tax, technology and personal finance ideas to founders and executives.
Royse Law Legal Wizard: Offering legal document templates and more.
Royse Law Incorporator: Incorporate your company the Silicon Valley way.
13
RoyseLaw Incorporate.com
RoyseUniversity.com
RoyseLink.com
RoyseLaw Legal Wizard
PALO ALTO 1717 Embarcadero Road
Palo Alto, CA 94303
LOS ANGELES 11150 Santa Monica Blvd.
Suite 1200 Los Angeles, CA 90025
SAN FRANCISCO 135 Main Street
12th Floor San Francisco, CA 94105
Palo Alto Office: 650-813-9700
CONTACT US
www.rroyselaw.com
@RoyseLaw
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