Grant Lawrence, president of Valhalla Angels Kelowna and co-president of Valhalla Angels Vancouver, has predicted that valuation will involve “tougher decisions and tougher due diligence” moving forward, largely due to a fear of “crashing and burning” amid unrealistic expectations from entrepreneurs.
Speaking of the “changing landscape of valuation”, Grant maintains that companies are presenting higher valuations than expected, with entrepreneurs doubling their valuations in short periods of time in a bid to attract investors.
“What validates that you're not just claiming your value as 2X?” Grant inquired, signaling that “sophisticated angels - not the novices that say 'oh, there's a shiny bright thing, I'll put some money into it'”, will be putting more effort into protecting their money.
Grant continued: “We're gonna see more people saying: 'I want to be the first money out, at least get my capital back.’”
“If you crash and burn here because you're not meeting expectations and now you have a down round, that's the fear - you're going to have early money at a higher valuation, and then you're going to have a down round because you can't meet the expectations to keep that valuation going,” he concluded.
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