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This week's choice is a look into why lower valuations may be a good thing for startup companies.
The internal valuations of both Stripe and Instacart have been updated in the past few months. The valuations of the startup were slashed as a result of the appraisals. We looked into 409As and found out that the meaning of a "valuation haircut" was completely different.
This is an excerpt from our piece.
Many founders and industry experts see a company receiving a 409A valuation that’s lower than its investor-assigned valuation as a boon. That’s because a low 409A valuation allows companies to grant their employees stock options at a lower price. Companies can also use the new, lower 409A valuation as a recruiting tool, luring prospective employees with cheap options and the promise of cashing out at a higher price when the company eventually exits.
Sumukh Sridhara, head of founder products at AngelList, says companies view 409As as an “internal equity granting authorization mechanism, and not them thinking we’re worth less.”
“If those companies would have their way, they would argue that they are worth 5% of what their public market comps are. But they won’t really get away with that,” he said.
You can read the entire story or the companion piece, "Stripe's new and lower internal valuation, explained."
If you'd like to get more into the weeds of this conversation, join us on aTwitter Space next Tuesday at noon. The time is at 10:30 pm We will have guests from the piece on the mic, and we will take a stab at the story.
In the rest of the newsletter, we will learn about robots and software eating up headquarters You can support me by forwarding this newsletter to a friend or following me on social networking sites.
It's Tomo Credit! Credit scores are going to be obsolete as a result of the $22 million raised by the fintech. It is not the first fintech to try this, but there is something special about it.
According to Mary Ann Azevedo, it is important because it is different from other credit offerings. The Tomo Score is used to identify potential borrowers with no credit score. No credit check is required for the TomoCredit card.
The image is from TechCrunch.
The site was shut down for a short time this week because it was so crazy. The event featured some of the biggest names in technology innovation. The effort was spearheaded by Brian Heater.
ROBOTS, unlike many tech sectors, is poised to have a great year in funding and has some key recession-proof characteristics. We covered all the panels for you to read and relive if you missed it.
Thanks to Haje for this witty subhed. The venture firm is building out global outposts and will no longer have a single physical headquarters.
It is important because the firm is placing priority on physical offices around the world. The still on-going Pandemic doesn't come as a surprise. It is helpful to know how distributed VCs adjust to a remote environment.
Contrary Capital has been remote since it was founded, but recently launched an in-person community space in NYC for portfolio companies and founders within the firm's network. Ankur Nagpal launched a fund with a plan to spend a month in a particular region. A community space is being created in Los Angeles. The first new office in more than a decade was opened by index venture in New York.
We have made it easy to apply for pitch practice with the new platform. It is great to see that investors know the importance of brevity, savviness and clarity in pitches.
If you complete the form, you will be able to apply for any time. 24 hours before the event, we will pick the startups and send them an email. You can apply for future events if you were selected for a single event. We want companies to give feedback more than once. It's growth at no cost.
It was seen on a website.
One Medical is being bought by Amazon.
In exchange for global outposts, the company ditches its physical headquarters.
The SEC has a position in the lawsuit.
Staff are told to act more entrepreneurial. It means work harder or else.
The company dumped a lot of its holdings of the digital currency.
Joe is stepping back from his role as a leader.
It was seen on a website.
What is it that Amazon gets for paying for one medical?
Where should US based companies file their patent applications?
The party is over in Europe.
Is Medicare saving the insurtech market?
Next time will be sooner or later.
It's N.
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