One interesting point that comes up a lot is how to factor the convertible debt into the premoney valuation of the Series A round. Option pool:  500,000 shares (some issued, some reserved, but that is typically irrelevant as the whole pool is normally factored into the premoney share price calculation). 7692 per share. MORE >>

In general, and in a more-or-less-ideal world, companies should be prepared to give up roughly 20%-40% of equity for each round of early financing, where the size of each round is enough for the company to increase its valuation significantly. After Seed: 80%. After Series A: 64%. After Series B: 51%. After Seed: 60%. After Series A: 36%. MORE >>

If the company's valuation is $2 million, $90k is 4.5%. Of course, to be able to use this kind of formula, you will need to be able to determine how much impact the person will have and figure out a valuation. I've talked about this topic before in How Investors Think About Valuation of Pre-Revenue Startups. n = (1.2 - 1)/1.2 =.167. MORE >>

Then check out these applicable Venture Hacks posts: Term Sheet Hacks , Option Pool Shuffle , Term sheet tune-up , & Terms that hurt. If you'd really like a book, I'd suggest the brief Term Sheets & Valuations , although I want to underscore that I don't think it is necessary. Yes, even bootstrappers. MORE >>

How to pump up your VC valuation. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed.  You have a 20% option pool, so you know this will take your ownership down from 80% to 60%, and the VC will get 25%.  Post-Money. MORE >>