When you speak to early-stage founders they often don’t understand how they can either determine a reasonable valuation for their friends & family, seed, or Series A round, or judge if an offer they receive is “fair and reasonable.” There are a lot of moving parts to valuation and things vary across rounds. So let’s get into the details and also cover what typical numbers look like for these types of rounds.
I’ll talk about valuation issues in the order things come up. So we’ll talk about valuation and other factors at play during friends & family, angel/Seed, and Series A rounds. As you go further in the capital stack and as investors tend to be more professional, valuation and deal terms can and do change and I’ll make sure to point out the differences and pros and cons for founders and investors.
Friends & Family investors
Typically friends & family investors are writing checks of $10k — $200k. Often they are family members or close personal connections who feel an attachment or affection to the founders and/or…
