funding, venture-capital, finance, angel-investors, revenuea team of three launched a startup 6 months ago and now generating 40K USD monthly revenue (not profit, but we already break-even for our cost + salary), the trend is going strong (monthly double digit grow rate).
Now, an angel investor come in and want to take 10% of our company, with $250K investment.
Is this amount of money fair? If not, what amount should we counter propose if we are going to sell 10% of our company for angel investment?
It might be low or high depending on where you live, on the type of business, on who you are, and on what have you.
Valuing a company is a fine art. Entire books were written on the topic. I’ve run into startups that raised at higher valuation with similar figures, and others that raised at slightly lower valuation with no traction whatsoever. The only rule that counts in the end is the amount of money the buyer is willing to put forward.
More practically, I’d suggest you consider Paul Graham’s sane advice on corp dev. The fund-raising version of the same is: if you have no use for the money, then you shouldn’t be wasting time with folks who offer it; if you have a use for it, then raise an actual round.
Assuming the latter, consider stalling a tiny bit – just enough to shop around. Locate another few more angels who are willing to put money in your business. They’ll give you different valuations. You’ll be able to narrow in on what the company is worth. And you’ll likely get more money on better terms.
All content is licensed under CC BY-SA 3.0.