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That is true, but with the caveat that there are often terms to what investors pay. If I invest $1,000 for 0.000000000001% of your company, but with a requirem
by JonFish85 11y ago
That is true, but with the caveat that there are often terms to what investors pay. If I invest $1,000 for 0.000000000001% of your company, but with a requirement that I am repaid $2,000 in the event of a liquidity event (plus some participation), it's not really much of a risk for me: I'm "guaranteed" a 100% return. The valuation is somewhat meaningless in this situation, except maybe in terms of marketing.
- tajen 11y agoAka "Preferrence shares", for those unfamiliar with the practice. In the example above, it makes the valuation virtually 100 trillions, except, like all valuations, it's virtual.