In this episode, Hall welcomes Amy Salzhauer of Good Growth Capital. Good Growth Capital is a venture capital platform focused on early-stage technology companies. Good Growth Capital's General Fund focuses on the east coast, filling the gap with early-stage technology investing, with partners located in Charleston SC, Boston and NY. The fund leverages proximity to closely support founders and connect portfolio companies.

In this episode, Amy shares her background before investing. Initially, she began working with scientists to get data for her doctoral dissertation at MIT. She was interested in why certain technologies successfully leave or don't leave the lab, even if they might have either a positive economic impact or a positive social impact. This then led to a Master's at Cambridge University in Plant Sciences with a focus on Molecular Biology, followed by an MBA at the Sloan School of Management at MIT. Writing her dissertation, she thought about how she enjoyed the work, and ended up starting multiple companies and becoming CEO of Ignition Ventures.

I recently saw a pitch deck from a seed stage startup which had a small amount of revenue. The deck claimed a valuation of $50M because a similar company exited at that valuation. I asked about his valuation, and he said he claimed $50M because “that’s what my company will be worth.”    

I reminded him that the example company who exited with a $50M valuation had $15M in revenue at the time of exit. He said, “I’ll have that too.”

I often see entrepreneurs calculating valuations for today's fundraise using tomorrow’s revenue.

Today’s revenue determines today’s valuation. Your business tomorrow determines your valuation tomorrow.

Investors match investments with the current state of the business. As you increase sales, team, product, and IP, your valuation goes up.

The takeaway here is raise only as much as you need to get to the next level. Otherwise, you’ll be raising more funding on a lower valuation, which means you’re giving up more equity than necessary.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!