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