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Comment by otoburb | Hacker News Reader

>>One partner suggested that LearnUp was a “ten on thirty”—ten million dollars should buy a third of the company, which would then be valued at forty million. “It’s more like ten on fifteen or twenty,” Horowitz said, cutting the company’s value in half. “Or six on twelve,” Andreessen said, whittling it further. Soon after the meeting, Ringwald turned LearnUp into an enterprise company.

Can somebody help explain how these calculations work according specifically to the article? The numbers make no sense to me if I use the article's explanation of this VC verbal shorthand.

"Ten on thirty" gives a $40M valuation? How? And how does "ten on fifteen" halve the valuation - according to the article paragraph above, wouldn't that double the valuation by investing $10M for just 15%, instead of 30%-33% equity stake?

EDIT: Thank you for the replies. I appreciate the responses.

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This is an error in the article, and the responses above are incorrect. 'Ten on thirty' means $10 million invested at a $30 million pre-money valuation, with a post-money valuation of $40 million. This means that the $10 million acquires 25% (NOT a third) of the company.

'Ten on fifteen' would mean $10 million invested at $15 million pre-money, giving $25 million post and the investors 40% of the company. And so on.

Investors almost always speak on a pre-money basis: thus, $15 million pre-money is half of $30 million pre-money.

Basing it on the statement from the article this is how I read it:

10/30 gives 33%(1/3rd) at a valuation of 40 million

10 + 30 = 40

So $40 million valuation for $10 million investment which gives them 33% of the company.

10/15 would imply 33%(1/3) at a valuation of 10+15 = 25

$25 million dollars is close to $20 million which is half of the original $40 million.

Marc's 6/12 implies 6 million investment at 18 million valuation for 50% of the company.

I mistakenly thought that the second number was a rough equity stake; that the second number was the current valuation should have crossed my mind but didn't. Makes much more sense now. Thanks!

> $25 million dollars is close to $20 million which is half of the original $40 million.

Better yet, $15 million is precisely half of $30 million. And that number is the pre-money (as in, the actual, now) valuation for the company.

So suggesting that a deal is "10 on 15" rather than "10 on 30" is suggesting that the company is precisely half the valuation of the first suggestion.

Ten on Thirty means $10M invested in a company currently being valued at $30M (before their investment, or pre-money valuation), so the whole company is valued at $30M + $10M = $40M after the investment.

Ten on Fifteen/Twenty means $10M invested in a company currently being valued at $15M/$20M, so the valuation after the investment would be $25M/$30M.

Sure thing. $10 million on a valuation of $30 million, which would then give you a new post-money valuation of $40 million.

The company is worth $30 million or $40 million depending on whether or not the investors put in the $10 million yet or not. Hope that helps.

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