Five For Friday: Valuations and Whiskey on a Friday

What I’m Reading 📖

Startup Valuation 101: How to Set and Justify Your Startup’s Valuation: By Amir Shevat

The article explores the challenges early-stage startup founders face when determining their company's valuation. While pitching a startup idea comes easily to many, setting an appropriate valuation is often tricky. Founders frequently provide uncertain or fluctuating figures or defer to investors to determine the valuation, which is a flawed approach.

Key Insights on Setting Startup Valuation

1. Importance of Valuation:

   • Setting the right valuation is crucial: too low means excessive equity dilution, while too high risks failure to raise funds or setting unrealistic growth expectations.

2. Common Valuation Methods:

   • Calibrate with Similar Startups: Compare with other founders and recent market trends to set a ballpark valuation, keeping in mind potential biases.

   • Multiply the Amount You Want to Raise by 4-6: This method aligns with typical investor expectations for equity ownership (15-25%) and provides a valuation range.

3. Ways to Justify Valuation:

   • Founder Track Record: A proven track record or relevant experience can justify higher valuations.

   • Product Progress: Demonstrable product development and user validation can boost valuation credibility.

   • Customer Research: Early customer engagement, commitments, and feedback can serve as proxy indicators of market potential.

Common Valuation Pitfalls

• Raising Too Little at a High Valuation: Risks running out of funds before delivering value, leading to "flat" or "down" rounds.

• Excessive Dilution: Giving away more than 30% of equity in early rounds can demotivate founders and deter future investors.

• Asking for Too Low or Too High Valuations: Low valuations lead to high dilution or frequent fundraising, while overly high valuations can hinder initial investment interest or set unsustainable expectations.

Conclusion

Setting and justifying an early-stage startup’s valuation is challenging due to limited data and evolving market dynamics. Methods like comparing with similar startups or using multipliers help set a valuation range, while founder experience, product progress, and customer research help justify it. Ultimately, valuation should be considered negotiable, with founders focusing on building products and creating customer value.

What I’m Drinking This Weekend 🥃

ABV: 49.5%
Average Price: $30

The Whiskey

Ezra Brooks has been a trusted name in bourbon since its inception in 1957. In 2024, the brand introduces its latest addition—a port-finished bourbon that brings a fresh twist to its classic lineup.

Tasting Notes

Nose: Opens with sweet notes of candy cane, rich cherries, warm vanilla, and wood chips, followed by hints of tobacco leaf and clove.
Palate: A burst of ripe cherry leads, accompanied by nectarines, bananas, chocolate chips, and vanilla, offering a rich, sweet experience. The whiskey has a notable grip, delivering a bold profile that punches above its ABV and feels closer to a higher-proof bourbon in the 110 range.
Finish: Long-lasting with lingering vanilla, oak, and milk chocolate notes, finishing with a return of the cherry flavor that stands out from the first sip. Surprisingly enjoyable from start to finish.

Bottom Line

Ezra Brooks consistently offers tremendous value for bourbon enthusiasts, combining quality with an affordable price point. This new port-finished release is a standout addition to the brand’s lineup, delivering excellent flavor and complexity.

What I’m Cooking 🧑‍🍳

@thatguywywy

Sausage & Tortellini Soup #soup #soupseason #souptok #souprecipe #foryoupage #fyp #food #comfortfood #foodie #sausageandtortellinisoup

Album I'm Enjoying 🎵

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