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I'm not sure what you mean. From an investment perspective you would ordinarily go through an exercise to determine what the business is valued at. There are
by brk 18y ago
I'm not sure what you mean.
From an investment perspective you would ordinarily go through an exercise to determine what the business is valued at. There are various tools and methods to these calculation, but the outcome is that you get a mutually agreed upon number.
One you've reached that stage, 51% of the company is worth 51% of this valuation number. If your business is valued at $1,000,000 US, then 51% is worth $510,000. Most investors would be happy to take 51% of the business for some number LESS than this, but as a rule of thumb none would take 51% for MORE than this amount.
- time_management 18y agoWhy would you ever give a single investor 51%?
- brk 18y agoBecause they paid for it? Because you needed the money? This is all really a hypothetical exercise anyway.
- time_management 18y agoLet's say the company's worth $1 million pre-money. To keep the analysis simple, let's say I'm the single founder, even though it's unlikely that I would be (single-founder successes are pretty rare). In theory, I'd be willing to give up 49% for $1 million. In practice, I'd ask for a better deal, given the risk inherent in taking on an investor. $1m for 40% I'd probably do, or $1.25m for 49%. At 51%, however, he'd basically become my boss, and I'd be an equity employee, so I'd consider it an acquisition and treat it as such. I'd negotiate such terms as CEO job title, a salary, and severance. He'd probably refuse the offer, and thus I'd end up going without his investment.