Worthworm Wisdom

Insights for entrepreneurs & investors

How to get out alive: using Worthworm for Shark Tank and pitch events

Posted by admin on 2014-01-21 02:35:05

Many startups turn to pitch events and shows like Shark Tank when seeking funding. If you’re considering going that route, Worthworm helps you answer critical questions like, “What is my business worth?” and avoid getting eaten alive. Here are some of the common questions we’ve received from ventures heading into the tank or on the stage.

What kind of venture does Worthworm work best for?

Worthworm focus on early stage ventures that are:

1. Seeking angel investment

2. Of a quality, nature, and maturity (seed stage to early revenue, generally) that seasoned angel investors would regularly follow and invest in

3. The type of company that venture capitalists would regularly follow for the purpose of providing follow-on financing as the venture matures

Why does the tool work best for angel deals instead of VC deals?

Most angel investors are looking to invest a few million dollars, while venture capitalists often invest much more depending on the risk associated with the venture. One of the driving factors of Worthworm’s analytic engine algorithm is third party comps that compare your venture to companies at the same maturity level. When we built the tool, we knew our target audience was entrepreneurs seeking investment from angels, as well as the angels who would provide that investment. Therefore, we purposely incorporated comps from deals with angel investors (not VCs) so that we could make the calculations as accurate and relevant as possible.

Is there a specific valuation range that I need to fit in to use Worthworm?

Worthworm provides a customized valuation using an analytic engine that compares your questionnaire answers to third party comps and uses 1,100 analytics parameters, over 4,000 outputs, and a proprietary Real Options algorithm. That means that it offers credible valuations for a wide range of angel-quality ventures, whether your company is worth a few hundred thousand or $20 million.

So, is Worthworm a good option if I’m trying to calculate a valuation for Shark Tank or another pitch event?

Worthworm is perfect in those situations. That being said, many Silicon Valley VCs and angel investors have pointed out that most of the companies who make a deal on Shark Tank have a starting pre-money valuation of at least $1 million. If you’re considering applying for the show, you should also keep in mind that many of the ventures featured on Shark Tank are small businesses that either don’t fall within the industries that most angel investors and VCs regularly follow and invest in, or that don’t have the likelihood to provide the high level of returns that angel investors and VCs seek in return for the risk they are taking.

Curious about how much your venture could be worth? Or looking for a world-class teaching tool? Or are you trying to do due diligence on potential deals?  Then try a subscription to Worthworm, and let us help you.