Big Picture-Macro View

What the greatest technology investors say about the Big Picture-Macro View

 

Early Stage Investing is Far from an Exact Science

Boston Millennia Partners venture capital firm

“Early stage investing is far from an exact science.  Early-stage companies are often comprised of little more than an entrepreneur with an idea. Valuations at the “seed stage” are generally driven by factors that by their nature are subjective. These include appraisals of the CEO and management team, novelty of the value proposition, evaluation of intellectual property, expected time-to-market, expected path to profitability, estimated capital needs and burn rate, syndicate risk, sector volatility and deal structure.  In post-seed investing, intermediate data points such as events demonstrating proof of principle and product validation will factor strongly in valuation determinations.   As a company matures to a revenue stage, more quantifiable data is produced in the form of operating statistics and performance indicators.  Actual results allow investors to more accurately model [] revenue, EBITDA, cash burn, pipeline close rates, backlog, bookings and enterprise valuation.”   A. Dana Callow, Jr. Managing General Partner, Boston Millennia Partners, Michael Larsen, Senior Associate, Life Sciences; paper called Understanding Valuation: A Venture Investor’s Perspective; http://www.millenniapartners.com/_documents/whitepaper/WhitePaperAttachment6.pdf