Another Question: How do I value my company for investors?
This is another tough questions. There is a delicate balance here. Giving up too much to early can reek havoc if you need more money later on. Not giving enough equity will limit your investment pool.
I have always thought that it has to be a win-win. These people may help you in a future business and you are their real investment. I feel that giving up 20-40% of a business before the first sale or product is fair. You also have to weigh chance of success with the overall potential upside. If you could invest in a company that has a chance at being the next google... you are willing to invest more and take less equity. A business in a smaller marketplace will require more equity for the same dollar invested.
Another way to value the company is upon predicted income streams. How much is the company predicted to make. This is generally based upon financials that are produced along with the business plan.
Ultimately, there is no way to predict what is going to happen in the future. There is no real science here, it is mostly throwing a dart at the dartboard.
Cheers,
Mike
1 comment:
I stumbled across your post quite by accident and since I believe there are no accidents just wanted to say how much I've enjoyed reading what you've written. I would like to know what kind of help you might need and how I might assist you in bringing your vision into reality and helping it grow.
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