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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 th
by 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 agoValuation 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'.