investment, angel-investors, valuation, ycombinatorYC started taking 6% and in later years moved to 7%. 500 Startups also took 7%.
Is there a special ROI value taking 7% while angel investing? What is the reasoning for this number, is there some math behind this decision?
The question is similar to this but different: https://startups.stackexchange.com/questions/3594/logic-of-ycs-default-offer
I think is more of a market adjustment. After all, the market has proven that there are less unicorns that we may expect, and 2015 will for sure not remembered as the year of successful IPO. Instead of reducing the capital invested they just raised they percentage.
The psychology behind the digit itself is that 7 is closer to 5 than 10, and therefore no damage is done by moving from 6 to 7 on a perception level.
As simple as it may sounds “human rounding mindset” is often exploit in pricing strategy.
All content is licensed under CC BY-SA 3.0.