Avoid Out-of-Market Valuations

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funding, the founder should avoid out-of-market valuations.

There may be investors who become so excited about the deal that they offer a valuation that is above the current market.

While this may appear to be a great opportunity to get a better price, the founder should avoid it.

Out-of-market valuations can put off other investors.

It will be difficult to finish the raise when the valuation is far off from the norm.

The founder should put that valuation into the context of the company's overall fundraising plan.

Pose this question: if the founder takes funding on that valuation, what will it take in revenue to raise the next round at a higher valuation?

If this revenue level seems daunting, then it means the proposed valuation on this round is too high.

Raise at a valuation that gives the founder the opportunity to raise the next round without too much of a challenge.

Be able to point to other companies raising at that valuation so as to convince investors to join.

While out-of-market valuations may seem like a gift, they're short-lived and will become a problem later.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.