Your periodic reminder: charge more. I feel pretty ambivalent about valuations, by which I mean that 2019 will clearly be lowest valuation for early software companies compared to year X and all years later in human history, and I don’t know whether X is 2020 or 2025 or 2030.https://twitter.com/jmj/status/1180525455973076992 …
(There are a lot of other factors, but for comprehensibility the best investors and the best companies converge on an equilibrium where many of those factors are much less salient.)
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Round numbers to make things easy: suppose an investor offers to pay $1 million for 10% of the company. If you notionally extended this to them buying 100%, which is not on the table, that would cost $10 million. That is the “valuation” of the company.
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Venture capital (VC, this segment of finance) describes valuations in one of two ways, historically because there are some people you want to describe valuations as low to (people giving you money) and some you want to describe them as high to (people you give money to).
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