7 ms·

OPTION C Investor 1 who will give you $100 in exchange for $100 stock Investor 1 is a good person who cares about your startup and helps with his/her experience

• RyanZAG 14y ago
  Helps to consider the different valuations at play here: Real value of your company - This one can only be found by using a time machine to jump forward and see the true cashflows. - It is the true value that the other values try estimate. Your estimate of the value - You get this by being objective about your business. - You should base all your decisions off this number. Other people's valuations of your business - Everybody has their own unique value - You don't want to sell stock to people who have a low value of your business. So obviously, there is not just option A and B, there are many different options based off other people's valuation of your business. There is another factor too, as you brought up, in that you can receive a sales discount - 25% off - with that 25% off either being in free work for your company, or in a plain 25% better offer than they really want to offer. This happens in the same way an orange store may sell oranges for 25% less than their competitor across the road, even if the oranges come from the same farm. The only important number is your own estimate of the value, and you should base all share decisions off that number alone. And try to get that number as close to the real value as possible. So if there is an Option C which is just plain better than the other options, it's the obvious choice to take - but be careful of any strings that may come attached in lieu of a cash payment - he may be expecting bigger rewards in future and can cause drama in your business getting them. Not everything with no cost is free...