Re:Valuation Shell Game: the 409A valuation
by nugget on Thursday March 09, 2017 @02:15AM
(#13827661)
On Tuesday I spend a hundred bucks and start a Delaware LLC that has no assets and no business plan - what's the company worth? Most would say $0 or close to $0.
After breakfast on Wednesday I spend a couple hours on an abstract powerpoint deck, make a bunch of phone calls, and by dinner time (based on past successes and personal network) I have $1m in seed funds committed at a $5m pre-money valuation. What's the company worth then?
It's one of the best tax incentives out there, in that successful founders and very early employees usually pay long-term capital gains on near zero-basis stock.
After breakfast on Wednesday I spend a couple hours on an abstract powerpoint deck, make a bunch of phone calls, and by dinner time (based on past successes and personal network) I have $1m in seed funds committed at a $5m pre-money valuation. What's the company worth then?
It's one of the best tax incentives out there, in that successful founders and very early employees usually pay long-term capital gains on near zero-basis stock.