Valuing Your Company
We've had a few people suggest we write about how VCs value the companies in which they invest. This is a pretty complex issue that in some ways is more art than science, especially in the earlier stage of a company (what we like to call the two guys and an idea stage). It is a topic we plan on addressing in more depth at some point, but for a basic primer on the subject, see this piece by Gabor Garai [via Corante].
Thanks for writing all the great pieces August Capital. Plenty of good, sound advice for an entrpreneur. You're doing us a great service.
I saw a "scientific" new valuation formula presented by a local SV VC a few months ago at a lecture at Stanford. He suggested the simple formula: Take your engineers, multiply each by $500k. Then take your MBAs, and subtract $250K for each of then. If one of your team members has both an engineering degree and an MBA, he/she nets out at $250K. The resulting sum is your post-money evaluation.
Funny, but actually hits the mark fairly close for a few first rounds I've seen lately.
Al
Mechanical Engineer (^o^)