Start-up valuation after Series B financing

June 23, 2015 1:46 PM

Suppose a privately held tech start up announces they received X dollars in Series B financing from a large publicly traded corporation. I want to know what the start up's valuation is as of the date of the financing. Is there anything in the publicly traded corporation's SEC filings that would give me insight into the start-up's valuation? The financing amount is pretty small relative to the corp's overall revenue. Assume I can't talk with anyone at the start-up or the corp. Thanks!
posted by bepe to Work & Money (5 answers total)

Almost all privately held start ups use Rule 506 to raise early series funding, which does not require them to generally disclose corporate revenue/valuation. You can get the SEC filings straight from the SEC, and they are surprisingly readable (although I suspect you will not find what you're looking for).
posted by saeculorum at 1:56 PM on June 23, 2015 [1 favorite]

There's unlikely to be anything in the SEC filings. When I used to do this kind of thing for a living (guess at valuations), we'd ask around as much as we could about the financing deal in general - what kind of situation was the recipient company in leading up to the financing, how were this deal's terms relative to other deals in the past 18 months, etc? And then we'd apply our general sense of what comparable deal terms in that specific sub-industry were going at (on a $amount x revenue basis), and then bump that figure a bit up or a bit down based on the scuttlebutt we were hearing as far as how good/bad the deal terms were.

If we were really lucky we'd be able to get that vague scuttlebutt direct from the source, but if not, we'd call up competitors, investor groups, and wall street analysts covering the public company and trade tidbits about industry trends while trying to suss out the details.

man do I not miss working in competitive intelligence
posted by deludingmyself at 2:23 PM on June 23, 2015 [2 favorites]

Oh yeah and then once we had our guesstimated valuation number sometimes we'd call more people and drop that educated guess into conversation to see how they'd react to it. People sure do love correcting you, sometimes more than they love their nondisclosure agreements. Good times!
posted by deludingmyself at 2:26 PM on June 23, 2015 [2 favorites]

Response by poster: Thanks folks. I kind of figured that the numbers I want would be hidden from view but I somehow thought that maybe the big publicly traded corp doing the investing would leak the details in their required filings. I pulled the SEC filings for the start-up and they do cite to rule 506 as the grounds for exemption from revenue disclosure.
posted by bepe at 4:54 PM on June 23, 2015

My rich uncle lent me $4000 toward the building of my new house. How much is the new house I'm building worth?

(forget about it...)
posted by BadgerDoctor at 6:40 PM on June 23, 2015