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About This Show
Hey guys! I’m Alexander Jarvis, a nomad, startup founder, sometime VC and recovered M&A banker. In this series we’re going to answer a question real founders and investors are struggling with every day. They won’t be generic topics, they’ll be tricky things you need to know, from how to fix your business model, specific aspects of growth marketing, fundraising and pitching investors, to how you track your metrics (that VCs want to know!). I’ve been blogging for a few years at AlexanderJarvis.com building epic founder tools and delving into complicated topics no one writes about. I love helping founders and podcasting is a fab new channel to share the one on mentoring I provide. #askalex.
Most Recent Episode
AA 0031: Asking founders their startup valuation tell you nothing
Welcome to the 28th podcast of the Ask Alex show! Today the question is "Asking founders their startup valuation tell you nothing."
In this podcast, we deal valuation from the perspective of investors. Specifically, why asking founders what their valuation doesn't make sense.
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“What’s your valuation?”
* Want to low-ball the founder so you can get a good deal?
* Save time by figuring out if founders have unreasonable expectations on valuation, so there is no point in talking more?
That’s fine if you have well defined logic, but I don’t think it makes sense:
* If the founder is dumb enough to be low balled they’re not going to perform anyway
* Expectations are important sure, but you can learn more by waiting a little longer
You learn very little from that question. What you want to know is:
* How smart is this founder?
* Do they have strong logic abilities?
* Do they have a plan?
You can get the basic info and hell of a lot more if you ask probing questions.
The better question has two parts:
* How much do you need to raise to hit your milestones?
* What dilution are you targeting in this round?
Why startup valuations (at early stage) don’t make sense
When startups are at a later stage, sure there are metrics. Bessemer track public SaaS multiples which can be a benchmark (though need s