The Pre-Money Valuation of Angel Deals in 2012

Perhaps the most difficult and contentious negotiations between angels and entrepreneurs develop over the valuation of seed stage deals. Most angels decided long ago that the answer is not convertible debt, which only postpones the valuation negotiations until a subsequent round. The best solution is a better understanding of the appropriate valuation for these risky seed stage deals and a proliferation in the use of sound methodologies for valuing early startups. Furthermore, the key to many valuation methods is a comparison to the median valuation of similar deals, that is, startups in the same region and comparable business sectors. Much like the real estate asset class, the valuation of comparable startups is an important consideration.

This post was written by Bill Payne in conjunction with Angel Capital Association. Bill is has been actively involved in angel investing since 1980. He has funded over 50 companies and mentored over 100. Bill is also a founding member of four angel organizations: Aztec Venture Network, Tech Coast Angels, Vegas Valley Angels, and Frontier Angel Fund.

Full Story: http://www.angelcapitalassociation.org/blog/the-pre-money-valuation-of-angel-deals-in-2012/