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$100k for 45% means that they value your company at $222k. $70k for 30% means they value your company at $233k. Your $80k for 33% investor valued your company a

by cd34 15y ago

$100k for 45% means that they value your company at $222k. $70k for 30% means they value your company at $233k. Your $80k for 33% investor valued your company at $250k. YC puts roughly $20k for 8-10% giving a rough valuation of $200k-$250k. I'll leave you to your own devices to figure out whether those percentages sound good. To decrease the %, you would have to convince them to value your company for more than the ~$225k range they appear to have settled on. You can negotiate and ask for a larger valuation, but, you risk losing the investment. Once you receive the investment, what happens to your risk? You get a salary for 6-12 months and they potentially could get $0 at the end.

gs7 15y ago
I'm less worried about the valuation, but rather about the percentage my co-founder and I would own. I think we could get by with 70k, even if we had to give the angels 35% for it, but my co-founder likes that extra 30k just to make sure we have enough for a while. You're right, we could renegotiate and risk losing the entire investment. I'm torn whether it's worth that risk. However, we would not get a salary from this investment. Our risk is the opportunity cost we invest through our time building the company, while the angels risk their investment.
- cd34 15y ago
  Valuation is precisely what tells you how much the cash they have handed you is worth in terms of % in your company. If you negotiate the company is worth $500k rather than $225k, their $100k becomes 20% rather than 45%. You get the same cash, you've just diluted your company less, allowing more room for your series A, B, C and successive rounds. If you don't need the cash, are you trying to get an investment too early? Does $100k materially speed things up past your competition? If you've had two parties willing to invest already, would bootstrapping and building your valuation up put you in a stronger position? A few months building, getting more traction, establishing the business, working out monetization and getting a firmer plan of what you'll use the investment for might be a good 'breather'.

by cd34 15y ago

gs7 15y ago

I'm less worried about the valuation, but rather about the percentage my co-founder and I would own. I think we could get by with 70k, even if we had to give the angels 35% for it, but my co-founder likes that extra 30k just to make sure we have enough for a while. You're right, we could renegotiate and risk losing the entire investment. I'm torn whether it's worth that risk. However, we would not get a salary from this investment. Our risk is the opportunity cost we invest through our time building the company, while the angels risk their investment.

cd34 15y ago
Valuation is precisely what tells you how much the cash they have handed you is worth in terms of % in your company. If you negotiate the company is worth $500k rather than $225k, their $100k becomes 20% rather than 45%. You get the same cash, you've just diluted your company less, allowing more room for your series A, B, C and successive rounds. If you don't need the cash, are you trying to get an investment too early? Does $100k materially speed things up past your competition? If you've had two parties willing to invest already, would bootstrapping and building your valuation up put you in a stronger position? A few months building, getting more traction, establishing the business, working out monetization and getting a firmer plan of what you'll use the investment for might be a good 'breather'.