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15% Equity for 150k. Too much? Standard?

An angel investment site has an investment company listed that offers funding of $150,000 for 15% equity.
The small print seems scary:
http://www.kima15.com/media/KimaVenturesStandardTermSheetSeedSummitTemplate.pdf

8 Replies

Michael Barnathan
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
It depends entirely on your company. $150,000 for 15% means that your company has a pre-money valuation of $850,000 (post-money of $1m).

The terms seem pretty reasonable / standard.
Izi Aviyente
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Izi Aviyente Entrepreneur
Head of Product Development at Kasaba Labs
It really depends on what you think the valuation of your company is - this funding puts you at $1m valuation which could be low if you already have traction/revenue or even a product built. They are offering seed funding and I guess their "unique value proposition" is the quick turnaround - typically you wouldn't be able to secure funding so quickly.

That being said, I would look for other options unless you are in very early stages and can't bootstrap.
Alex Littlewood
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Alex Littlewood Entrepreneur • Advisor
Founder & CEO at Motoroso
Shannon, it is becoming much more common to raise early money in the form of convertible notes. and YC recently released a standard called SAFE, which has very reasonable terms for notes. This would allow you to avoid a "valuation", which at the early stage is a cumbersome process, and is often bulls**t anyway. This approach allows you to easily get money to keep working, achieve traction, and then when things are going well and you're ready to scale, then you can raise a "seed round" which will enable you to grow. This will be more like $1-3M for 30% equity.
Michael Barnathan
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
Seed rounds aren't usually that big.
Jared Schaffer
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Jared Schaffer Entrepreneur
Founder & CEO at The Tribe Entertainment, Inc.
This seems like a sketchy middle ground between angels and accelerators. Giving up 15% at a $1M post-money valuation is a little dangerous going forward. You seed investors are going to expect to buy in 25-40% sweet spot, and you might be looking to raise appx $1M at a $3-4M post-money valuation. These are not fixed numbers by any means. Just an example.
Alex Littlewood
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Alex Littlewood Entrepreneur • Advisor
Founder & CEO at Motoroso
Here's a list of recent seed investments from SV angel, ranging up to $6M
http://www.crunchbase.com/financial-organization/sv-angel
Joanan Hernandez
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Joanan Hernandez Entrepreneur
CEO & Founder at Mollejuo
Hello Shannon,

The subject was already treated before here on FD on this thread.

From that thread a really important link arise with good information, take a look at it here.

Cheers!
Alex Murray
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Alex Murray Entrepreneur
That puts your effective valuation at $1m post-money. Sounds like expensive capital to me. You may want to read up on convertible note standard deals for startups. I think most of them come out to effectively put startups at $~4m post money. Anyone else have thoughts? Best, Alex
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