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Question: Why don't founders control valuation if it is exceeding what they believe to be the true value of their company?
by rokhayakebe 12y ago
Question: Why don't founders control valuation if it is exceeding what they believe to be the true value of their company?
- deleted 12y ago[deleted]
- endeavor 12y agoI'm really interested to know this too. A few benefits I can think of: - Their shares go farther if they buy another company with stock - Helps recruiting and retention if their employees can sell their options on secondary markets
- drewvolpe 12y agoThey do. If they want to give investors a lower valuation, they can. But why would they ?
- yumraj 12y agoFor fear of a down round - but most don't think that far. Basically let's assume a company raised money on a $10B valuation, and needs money down the line for a variety of reasons. They will have to make sure that the future round is at $10B+ which may or may happen, especially if the company is not flying high at that time. And, if they can't raise at $10B+, they'll have to go for a down round which can look very bad.