2 ms·
> Buying secondary shares at X, making a tiny investment at 2X, and then claiming the company is worth 2X. It should be possible to figure out the formula for
by konschubert 7y ago
> Buying secondary shares at X, making a tiny investment at 2X, and then claiming the company is worth 2X.
It should be possible to figure out the formula for how much an investor needs to invest in a given round, given a previous investment into the company, such that the downside of investing at an increased valuation exceeds the upside of the existing shares being valued higher than before.
In other words: How much would SoftBank need to invest such that it wouldn’t benefit from bluffing on the valuation?
- pmart123 7y agoI believe it would depend on the liquidation preferences and the preferred stack. This would allow them to potentially own most of the company in the event it was acquired for a worse valuation, went bankrupt, etc.