I’d put the percentage equity that the VCs took for their $3.5 million at Meebo at a lot closer to 20% pre-money given how hot Meebo was (again, based on all the buzz about them on Sand Hill Road).
Still, let’s assume 25% pre-money.
That makes the pre-money valuation of the company 3.5 * 4 = $14M.
In other words, Sequoia put in $3.5 million and got 25% of Meebo, putting the company’s value at $14M pre-money.
After the investment, Meebo’s post-money valuation is $17.5M (i.e. 14 + 3.5, the value of the company + the cash). That means, Sequoia now owns 20% of Meebo, post-money. Like I said, that’s about the minimum any self-respecting VC firm in the Valley would like to hold in a startup after Series-A financing. And Sequoia is right up there with Kleiner-Perkins at the top of the VC hierarchy in the Valley.
Note that at the other extreme of 40% post-money, Meebo’s post-money valuation $8.75M. That puts the pre-money valuati…