Valuation is a tricky aspect of fundraising from "summary" of Mastering the VC Game by Jeffrey Bussgang
Valuation is a tricky aspect of fundraising. It is a complex dance between the entrepreneur and the investor, where both parties are trying to find common ground on the value of the company. This negotiation is crucial because it not only determines how much money the entrepreneur will receive for a given percentage of the company but also sets the stage for future financing rounds. Entrepreneurs often have a tendency to overvalue their companies, believing that their idea is worth more than it actually is. On the other hand, investors want to get the best deal possible, which means they will try to push the valuation down. Finding the right balance between these two perspectives can be challenging, especially for first-time entrepreneurs who may not have experience in negotiating valuations. One common mistake entrepreneurs make is focusing too much on the valuation itself, rather than considering the overall terms of the deal. While valuation is important, other fact...
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