How much is my startup worth? This is one of the main questions most entrepreneurs ask themselves, especially when they’re looking for funding.
My colleague Alejandro Palacios explains, simply and clearly, how to get a first grasp of it.
A startup can progressively increase in value if you add value at each stage: from the idea phase (registering the idea), through conception (investing in developing the idea with programmers’ hours, domains, etc.) and seed capital (with the first capital contributions from Family, Friends and Fools), but above all when your product or service is out on the street and you generate your first sales, your first contacts and customers.
Here I’m also leaving you an interesting link to work out what percentage each co-founder should get depending on their commitment, work, sales skills and network of contacts. Co-Founder Equity Calculator.
Caminando entre emprendedores.
These two concepts relate to the moment when our startup finds itself having to open a funding round. In other words, we’re looking for funding and our first investor is already in sight. You may know how much you think you need, or the investor may simply tell you how much they’re willing to invest, but you might not know, or not be able to answer, the question of how much your startup is worth.
Generally we’ll have to make a valuation based on objective criteria, but also on subjective criteria that help us take the plunge and put a figure on what we believe our company is worth.
This is where the two terms in the title come from:
- Pre-money: This is the initial figure, what we consider our company to be worth before the new investor comes in.
- Post-money: what the company is worth once the investor has made their financial contribution.
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