Buffer Wants To Raise $3.5M At A $60M Valuation — Here’s The Term Sheet

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Buffer, a social media management company, is raising a $3.5 million Series A round of capital. Most of the money will go to its founders and some early employees. $1 million of the total will be afforded to operations. To date, Buffer has raised $400,000.

Buffer, which has monthly revenue of just under $400,000, is profitable. The company wants to have enough cash in the bank to survive any sort of downward spike it said in its announcement of the funding event. Given current market dynamics, and fears, the idea isn’t a bad one.

Buffer is a damn weird company. The salaries of its employees are public, along with its equity table. Its revenue chart can be found here. It’s a company with all glass walls.  I found it confusing enough that I dragooned its leaders into coming to TechCrunch to talk about what the hell they are up to.

The company is raising at a $60 million post, or a $56.5 million pre-money valuation. At time of writing, $350,000 of the round, or 10 percent, is still open — the other 90 percent is committed, but not wired. The company is soliciting — viva la JOBS Act, in other words — the rest. Presumably the firm could have raised the full amount without the public point, but it instead wanted to do it in this manner. Recall Google’s reverse Dutch for something close to a historical precedent.

I spoke to a number of venture capitalists about the deal, and answers varied from saying that it was overpriced, to roughly in line with normal market valuations. There was something close to harmony in saying that the founders taking money off the table was strange. Money sources want to see founders keep as much of their personal net worth tied up in their projects as possible, increasing buy-in. On the other side, being able to right your personal financial ship as an entrepreneur isn’t to be diminished.

One venture capitalist that TechCrunch spoke to indicated that Buffer’s annual recurring revenue growth wasn’t up to their expectations for its proposed valuation. Another stated that the valuation was in keeping with current expectations, after a number of caveats were taken into account.

The size of the round, and the percentage of it that is secondary were other points of concern — too low and too high, respectively.

Presumably, the round will close without delay. The amount of capital that has already been committed implies that — at the same time, the $60 million valuation puts the firm at a nine-figures-or-bust exit point. Who will buy them is a decent question to ask.

Buffer: Doing things its own way. We’ll see what happens next.

Here’s the term sheet: