Figuring out how much equity to give to angel investors for seed capital?


2

My startup is in the very early stages. We have a very raw prototype and haven't launched yet and so have no revenue either.

Two angel investors are interested in putting $20,000 each in our startup for a total of $40,000.

How do I put a valuation on a startup that doesn't really exist yet? How much equity is fair for the angel investors at this point?

Equity Angel Seed Funding Valuation Angel Investors

asked May 30 '15 at 13:41
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Darlene Vera
11 points

2 Answers


1

Yeah honestly we're having the same difficulty as well. It's so hard to valuate a startup when it's only in the prototype or product development phase. We're looking to ideally raise $100,000 of which the bulk will go for advertising and promotions because our app content is primarily driven by the end users, so we really have to push the app till it reaches critical mass.

Apparently one good way to do this is to look at your space and see what your predecessors have done. It'll also give you an example to show your potential investors when you tell them that this is the norm.

answered Jun 11 '15 at 06:01
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Arjoon Som
11 points

1

Hi there Darlene - as with anything its always difficult to put a value on it. I decided that I would raise the first £50,000 and give 16% of the company away.

To date I have only needed to raise about £8k for a total of 2.6%.

This values the business at around £300k - and now we are almost ready to launch phase 1 of the build. With a view to going to a seed round once we have proved the concept.

I hope this helps.

JP

answered Jun 1 '15 at 14:32
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MrP
11 points

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