Share valuation Summary

Any funding decision within a startup journey is always tied to the valuation of the startup at the point of
investment. This session was all about understanding how a company is valued and some key terms from a
valuation and fundraising perspective.
Decoding Valuation
It is important to understand what investors look at when deciding whether or not to invest in a company.
These factors differ from the stage of the funding and are summarized in the table below:
Sr.No. Funding Stage Factors Affecting Valuation
1 Angel/Seed  Idea
 Team
 Product
 Market Size
2 Series A/B  Traction
 Product Market Fit
3 Series C/D  Current and Projected Revenues
Valuation and Dilution
Here are a few terms that you should know to understand the fundraising and the valuation process:

  1. Pre Money Valuation – Valuation of your company before funding
  2. Post Money Valuation – Valuation of your company after funding
  3. Dilution – Equity/Ownership of your company exchanged with investor for funding

Cap Tables
Cap Table or Capital Structure Table essentially represents the percentage ownership by various
shareholders of a company and the respective value of their shares. A sample cap table is given below:
Date of Issue Number of Shares % of Total Value of Shares
Navin 1/3/12 40,000 25.6% 6.4 crores
Yogi 1/3/12 40,000 25.6% 6.4 crores
Jitendra 1/3/12 20,000 12.8% 3.2 crores
Total 100,000 64% 16 crores
Date of Issue Number of Shares % of Total Value of Shares
Mr. Ritesh 4/5/13 25,000 16% 4 crores
Tetris Ventures 11/4/13 25,000 20% 5 crores
Total 50,000 36% 9 crores
Net Total 1,50,000 100% 25 crores
You should be able to:
At the end of this session, you should be able to:

  1. Understand the basis on which your company will be valued
  2. Understand Dilution from funding received
  3. Generate Cap Tables and think about using ESOPs

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