I attended a good Entrepreneur's Only Workshop lunch at the CED this week. The speaker was Tim Gupton, an accountant and partner at HPG who has been involved with and co-founded quite a few biotech startups. He gave a well-prepared talk about company valuations. The word must be out that he's a good speaker because the room was just about packed.

Here are a few notes I took during his talk that I thought were interesting:

• Investors expect three rounds of funding and then an exit (acquisition or IPO)
• Typical venture fund is for ten years. Best to get in right after the fund closes so the VCs aren't pressuring you for an exit too early.
• "It costs a couple million dollars a year to be public" (for compliance)
• Seed financing - they expect over 80% return
• Startup financing - they expect 50-70% return, already have prototype product, not profitable
• First stage financing - they expect 40-60% return, on-going business, real product, customers, not necessarily profitable yet
• Two types of expert valuations (for a private startup):
  • Restricted Letter Report - internal, costs 4-5K
  • Unrestricted Report - public, 15-25K
• QBV (Qualified Business Venture) Tax Credit is important for angel investors - 25% tax credit for NC state taxes

Posted by JoshC at February 16, 2007 11:27 PM

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