In terms of direct numbers, what can be considered a great financial upside (for investors) for a startup after 2-3 years of the first seed round?

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JASON LEMKIN

You said … “Great”.

100x.

This is what moves the needle for the very first investors.

I invested at $1.5m pre.  You sell for $150m+ before material dilution.

Or put differently, for a professional angel a “great” investment is one that returns at least seven figures.  I put in $50k.  I did 20 of these investments.  $50k x 20 = $1m.  A “great” one “returns the fund” … I get out $1m.  20x. 

S0 20x is really, really good for a true angel / very early seed investment.  But alone, it only returns 1x of my total portfolio.  So not worth it, absent other wins, etc.

A really great one gets me to 5x alone.  That’s be $50k = $5m.  Again, 100x.

And I’m skipping over a lot of dilution here.  The more dilution, the more the absolute sales prices have to about double, rough-and-tough.

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Published on August 4, 2015
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