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Question, because I don’t know how this works. Who sets the valuation on a company? Does a CEO have anything to do with that, or is it wholly external?
by akulbe 7y ago
Question, because I don’t know how this works. Who sets the valuation on a company?
Does a CEO have anything to do with that, or is it wholly external?
- goatinaboat 7y agoIf you declare your company has a billion shares and I buy 1 for $1 then you have a valuation of... one BILLION dollars. If I later buy 1 share for $2 then your valuation has doubled. That is basically SoftBank’s business model.
- Dunedan 7y agoBasecamp even made a headline out of it a while ago: https://www.linkedin.com/pulse/basecamp-valuation-tops-100-billion-after-bold-vc-investment-fried https://www.linkedin.com/pulse/basecamp-valuation-tops-100-b...
- misiti3780 7y agothat article is hilarious!
- kamyarg 7y ago> Basecamp is now a $100 billion dollar company, according to a group of investors who > have agreed to purchase 0.000000001% of the company in exchange for $1. Just wow, this is gold.
- 100-xyz 7y agoValuation is based on what percent of shares an investor buys for how much. eg; if I buy 5% (0.05) of a company for 100$. The company valuation would be 100 / 0.05 = 2000$. It can be a little more complicated with post and pre buy valuation, but that is the general idea.