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> Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital That is not the valuation of the company, not
by rkk3 5y ago
> Something's screwy about that 409A, it puts the valuation of the company at $3.85M on $10M in invested capital
That is not the valuation of the company, not all shares outstanding are common, some are preferred which are going to have a substantially higher FMV for an early stage.
I don't know what a "normal" multiple/mark-up preferred would normally have at this stage, obviously it varies on terms. 55M shares outstanding this early would not be the sign of a "healthy" cap table unless they didn't start with the standard 10M outstanding.
- throwaway_9989 5y agoThe preferred price is about $0.9 (I heard it's been like this for the last 2 rounds). Does that mean the current valuation of the company is $49M? The parent comment is also correct. We've experienced a down round due to the pandemic.
- comp_throw7 5y agoIf the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything. Take the cash offer (though, if you're in the US and have 4 years of experience, $120k is a bit of a joke too; you should be able to do substantially better even limiting yourself to full-remote companies).
- rkk3 5y ago> If the company's gone through a down round, it's very likely they took funding on unfavorable terms (i.e. worse than 1x liquidation preference), which makes it that much less likely your (non-preferred) equity would ever be worth anything which is expressed in the preferred share's being valued at 13x the common shares
- rkk3 5y ago> Does that mean the current valuation of the company is $49M? No.