Question: My partner and I are trying to agree on an initial valuation to establish an equity share percentage for a seed stage company that is not yet operating. I realize there are many factors you take into account, but I am wondering about my partner’s suggestion that we use a multiple of year 4 [...]
Part IV of a Continuing Series on How to Select an Angel Group Several months before Jason Calcanis’ crusade (or jihad—depending on your political affiliation) against for-profit angel groups, I wrote a post about evaluating angel groups and the criteria to use when seeking investment. For those that didn’t see the earlier post, the list [...]
Far too many of my angel colleagues are fixated on patents as the source of sustainable competitive advantage. While these are often the source of competitive barriers they are by no means the only effective method for generating high growth. In fact, there are many situations where the patent itself provides little growth momentum. We [...]
When we’re evaluating a possible investment, it is easy to neglect how the strategic value premium will be determined and how this impacts on what we can expect as an exit value. Our initial focus is generally on target need, customer and competitive advantage but while these protect the business they don’t guarantee high growth [...]
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When Growth Decreases Value
I have frequently been heard to say to an entrepreneurial team ‘Don’t grow!’ This is normally received with a chorus of exclamations and some strong objections. It is only as I set out how their value is created through strategic value rather than growth that they see the logic of putting their efforts into creating [...]