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Start-ups financials!
A lot of startups get their first funding from friends and family. Excite did, for example: after the founders graduated from college, they borrowed $15,000 from their parents to start a company.
this is the BEST and most complete article I have found so far... by Mar 16
Venture Capital Deal Algebra
Investment = Share Price * Shares Issued
Alternatively: Price : $______ per share (the Original Purchase Price). The Original Purchase Price represents a fully-diluted pre-money valuation of $ __ million and a fully-diluted post money valuation of $__ million.
It’s only in the event that the deal works out that the percentage of the business (the thing that valuation is supposed to determine) matters in terms of how much money we make. Another important factor to consider is that only a relatively small portion of early stage venture investments really work out in the way they were supposed to when the investment was made.
How do you calculate Series A price per share? : Startup Company
Decreasing the size of the option pool is one way to increase the Series A price per share. Series A investors want to make sure that there is a sufficient option pool for future hires, and that the dilution for the option pool is borne by pre-Series A stockholders. A company may argue that the size of the option pool does not need to be as large as requested by the Series A investors.
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