Is same valuation for next round a down round?

(This was my answer to a question on Quora)

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Well, investors understand that all plans do not go as planned. And therefore you may have had a plan to achieve something with the earlier round you raised but were not able to. Therefore there is no valuation increase in the bridge round you are raising. 

As long as you have a plan to get back on track that helps you develop a sound foundation for a business, in my view, future valuations should not get affected But, as you would agree, valuations are not dependent on any single dimension and there will be several factors to consider whether this will impact future investments.

(Typically, if your earlier round investors have invested in the next round, even if at the same valuation, it is a signal that there is belief in the concept/model/opportunity/value proposition… and faith in you… and that is a strong signal. On the other hand, earlier round investors not participating in the subsequent bridge round, even if it is at the previous valuation usually will trigger some questions.).

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Author: Prajakt Raut

Prajakt Raut is the founder of Applyifi.com, and author of the book for startups - ‘Starting Up & Fund Raising’ Prajakt personal goal in life is to encourage and assist a 100,000 people to become entrepreneurs. _____________ Prajakt is the founder of Applyifi - an online platform that provides startups a 36-point scorecard and assessment report on the venture's investment readiness [www.applyifi.com], and helps them improve their odds of getting funded. Prajakt is also the founding partner of The Growth Labs, a platform where growth-stage companies get sharp, incisive advice from senior professionals and experienced entrepreneurs. [www.thegrowthlabs.in] Before starting Applyifi, Prajakt was the head of operations at IAN, founding member of a leading incubator, and the Asia-Director for TiE (2004 - 2007). Previously Prajakt had co-founded Orange Cross, a healthcare services company, and was part of the founding team member of Idealake Technologies. While in college Prajakt had founded a printing business and has spent over 10 years working in leading advertising agencies. Prajakt’s book, ‘Starting Up & Fund Raising’, helps startups understand an investor’s perspective, and helps them improve their odds of getting funded. The book also helps entrepreneurs understand the building blocks of a business.

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