Feld Thoughts

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Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Jane felt comfortable with receiving 10% for $50k, but no less, so they agreed on a $450k pre money valuation of their startup. However, there is a lot to be said for keeping things simple during the early stage of a startup. It helps control transaction costs in terms of both time and money.

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The Silliness Of Recapping Seed Rounds

Feld Thoughts

But instead of adding it on to the note or doing an equity round with a price, which could still be an early stage price but below the cap, they make the argument that since the company couldn’t raise a round, the company is worthless. So the new investment gets 60%, the founders get 39.9%, and the $1m of seed money gets 0.1%.