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How do you get to those dilution numbers? The OP is already at 14M, apparently with no significant outside funding. If you assume they'll be at 5-20% ownership
by mseebach 9y ago
How do you get to those dilution numbers? The OP is already at 14M, apparently with no significant outside funding. If you assume they'll be at 5-20% ownership at 400M, practically all the "growth" will have been cash from equity sales. Presumably the OP believes that he can actually grow his business to that size, like he grew it to 14M.
- rdlecler1 9y agoHe’s at a $14m acquisition number. How much of the company does he own? Does he have one or two other founders? Marching to a $400m valuation is going to dilute you around 20-30% each round to both investors and ESOP. I’m giving an approximation but what I’m pointing out is that you not going to own 100% of the company and you may see a <1x - 20x multiple on your current ownership.
- mseebach 9y agoBut he's not "marching to a $400m valuation", that's what he believes he can grow the company to. If you get a 20x multiple on 14M for 400M, you have grown less than 50%, and raised a ton of money. You're not magically getting diluted into the ground because you raise a bit of money.
- rdlecler1 9y agoAnd to grow a company to that he’ll need multiple rounds of VC funding plus ESOP and so you need to estimate how much of the company he might own at the end of it all. It’s not going to be $400m. So if he has a 100% option to take $5-$14m off the table today vs a 20% possibility of taking $100m off the table, I’d be included to take the former Given the resistance he/she is getting raising a seed round.