4 ms·
You can get a quick fermi estimate of the value of the equity by multiplying their payroll by the percentage of the company you're getting. Presumably, payroll
by ThrustVectoring 11y ago
You can get a quick fermi estimate of the value of the equity by multiplying their payroll by the percentage of the company you're getting. Presumably, payroll swaps cash for an equal amount of value provided to the company. So if they have ten employees @ 100k per year, 1% of the company is worth roughly $10k/yr.
Your risk profile may vary, so treat this as a starting point.
- gojomo 11y agoI think this is exactly backwards for the poster's inquiry. Yes, the company's offer has implied a valuation (and the company even says it's based on actual investor-dollars-in). But the poster already knows that, and isn't completely confident the offer reflects the real valuation offered investors. So there's no more calculation to be done from the offer alone. They instead want to know if they could/should require more formal documentation of the company's claims.