I recently came across the following post from Aaron Levie, the founder of enterprise cloud storage and content management company Box. Box recently went public and currently has a market cap north of $2 billion.
YC startups: don't be too anxious about valuations before Demo Day, our angel round was $80K on $240K pre. This was also before electricity.
— Aaron Levie (@levie) March 23, 2015
Basically, Aaron points out that he raised $80K for Box’s seed round at a $240K pre-money valuation. Doing further research on the web shows that Mark Cuban was Box’s first investor.
I’m not advocating that startups raise at a $240K pre-money as I think that this is a pretty significant undervaluation of any company targeting a big market that decides to take outside funding. However, at a time when seed valuations can be as high as double digit million dollars, Aaron’s post is an important reminder that founders should be optimizing for their startup’s chance of success, not their valuation.