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it could be interesting proposition if founders know how much to value, if they have an experience mentor then they can calculate all kinds of permutation combi
by ideas101 19y ago
it could be interesting proposition if founders know how much to value, if they have an experience mentor then they can calculate all kinds of permutation combination. Sometime it is better to keep the control and give away stake and vice-versa.
But following is what i learned from one of the venture blog, its very interesting and educating:
Entrepreneurs focus on valuation when they should be focusing on controlling the company through board control and limited protective provisions.
Valuation is temporary, control is forever. For example, the valuation of your company is irrelevant if the board terminates you and you lose your unvested stock.
The easiest way to maintain control of a startup is to create good alternatives while you’re raising money. If you’re not willing to walk away from a deal, you won’t get a good deal. Great alternatives make it easy to walk away.
Create alternatives by focusing on fund-raising: pitch and negotiate with all of your prospective investors at once. This may seem obvious but entrepreneurs often meet investors one-after-another, instead of all-at-once.
Focusing on fund-raising creates the scarcity and social proof that close deals. Focus also yields a quick yes or no from investors so entrepreneurs can avoid perpetually raising capital.