3 ms·

5% is a ridiculous amount. What does this show to potential investors? You either value 5% of your company at ~$1000 or you're insane.

• deleted 18y ago
  [deleted]
• charlesju 18y ago
  5% is not a ridiculous amount. You have to think about the expected valuation of the startup. What are the odds that this particular startup is going to exit. As a lifestreaming service, I'd say the odds are around .01% (sorry, lets be realistic, web 2.0 doesn't have that many exits). Given an exit of about $1M, we're talking about an expected valuation of the company at about $1,000 at its current state. Then the question is, will giving up 5% of the website at its current state increase the expected valuation by more than 5%. I think that with a "kick-ass design" we can raise the success rate to 0.05%. Which increases the overall valuation by more than 5% of the stock given up, which increases the overall expected exit price, ergo 5% is worthwhile.
  • pclark 18y ago
    it's one thing for founders to pluck valuations out of the air, and an entirely different thing for us to value the company. You're quite correct. What if they don't exit? Whats 5% of nothing? I'd take the cash, thanks
• webwright 18y ago
  Not when you consider that with any success/fundraising, you can just dilute him the 5% owner into virtually nothing without batting an eye. ;-)