Re: How to become a Dragon?

> >> "Tim" wrote
> >> > Tee hee. Someone complaining about people not
> >> > "doing simple maths", and getting it wrong themself!
> >> > Actually, wanting £150K for 10% means they
> >> > are valuing it at £ 1.35 Million (not 1.5).
> >> >
> > <alfi286@xxxxxxx> wrote
> >> No, if they valued it at £1.35 Million
> >> then a 10% share would only cost £135k
> >
> "Tim" wrote
> > Someone else getting it wrong too!
> >
> > If it was valued at £1.5M and then they paid
> > another £150K into it, then it would be worth
> > £1.65M and so 10% of it would be worth
> > £165K - for which they'd only paid £150K !!
>
"Tumbleweed" wrote
> Thats not how it works though...

Oh yes it is!
[Panto time?!]

"Tumbleweed" wrote
> ... the 150k is paid in, in the expectation that
> the company *will be* worth £1.5M (at least)

If they thought it might be worth £1.5M in the future, then they certainly
wouldn't pay 10% of that now for 10% of the equity, because it might not
happen!

Suppose it might be worth £1.5M in the future. Alternatively, it might be
worth £0.
So based on probabilities, they might value it at (say) £0.5M now.

"Tumbleweed" wrote
> None of the people on DD have businesses
> worth 1.5M to start with! (Or at least,
> not ones that they want investment in).

.... which is why the Dragons say "you are over-valuing your company, at
£850K!" when someone wants £150K for 15% of the company.
Have you never tried listening to the figures that the Dragons actually say
when people offer too little equity for the money?!



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