If a year ago, an entrepreneur was hoping to raise 3 million at a 6MM pre-money valuation. Today, that very same entrepreneur should divide by 3 on both the money raised and the valuation. That same deal would be a 1MM raise at a 2MM pre-money valuation -- as a starting point. This rule of thumb seems to be applying to our Founder's Co-op portfolio. One of our companies is raising 300K at 1MM pre-money: this same deal a year ago would have been a 1MM raise at 3MM pre money. This rule of thumb applies to money raised and valuation.
The world has also changed for two other important terms:
- liquidation preference is often 1 times with no cap.
- ratchet: in the event the company doesn't make progress there is often a full ratchet for future downside financings.