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Obviously the part about valuing the work was referring to work performed by the founders. Investors were involved in the process as well. It is easy to "valu
by drewcrawford 18y ago
Obviously the part about valuing the work was referring to work performed by the founders.
Investors were involved in the process as well. It is easy to "value" an investment--it obviously already has number associated with it ;-)
I can obviously forsee issues arising if investors are not on board with this sort of valuation system. We were able to dangle the carrot of giving them some additional rights in our operating agreement, which seemed to make them happy.
- webwright 18y agoUm yeah-- valuation (as most people refer to it) is the process of valuing a company. And no-- valuing an investment doesn't have a number attached to it until you negotiate one (which is the hard problem that PG refers to). If I invest $100k in your company, sure-- I've invested $100k. But at what valuation? Is your company worth $1m post-money, thus giving me 10% ownership? Or is it worth $200k post-money, giving me a 50% stake? That's the hard part. Regarding investors not being on board... I'd go a bit farther and say that your system is likely a fundraising death-sentence unless you are already a runaway success who can make the rules. No one is going to invest in a company with a shifting cap table and no formal vesting. I'm all for innovation, but I don't think you're buying anything here other than additional risk. In this case, the convention method actually works pretty well.