What is the valuation of money?
The valuation of money is an estimate of the value of the company at a certain point before the area of investment from external sources. This award may represent the company's financial health before the public on the stock market, or before receiving infusion of funds from risk capitalists who acquire partial ownership of the company. On the other hand, the valuation of money is carried out after the company has received funds and therefore includes this amount in the valuation. Sometimes it is difficult to make a valuation before money, because this must often be done before the evaluation of the company was fully formed. These decisions are even harder when the start-up company is a company that can have a little more than a basic idea or business plan at a time when the valuation must be made. Performing the precise prize pre-lene can be lucrative if it goes well, as the entrance to the ground floor of a potentially successful society can be extremely profitable.
It is important to understand how the valuation of money affects the investors involved once the investment is carried out. Imagine, for example, that a group of investors decides that a new start -up company is worth $ 100,000 (USD); They decide to invest $ 50,000. Adding the total number of money in the amount of $ 100,000 to $ 50,000 brings an investment a total of $ 150,000, which would be money after money after money.
The percentage of the company owned by new investors in this example would be 33.3 percent, which is a total of $ 150,000 for money in the division of their investment amount of $ 50,000. This percentage would grow if this group decided on a lower amount for valuation before money. Entrepreneurs of the AMO by the Company must agree on this sum during the negotiations before the financing.
The main challenge for investors during the valuation phase before money is the lack of information, toTeré can actually start new companies. Since novice companies often do not have any balance sheets or income reports that would prove investors, it may almost impossible to accurately reduce their value. As a result, negotiations between risk capitalists and companies may be essential for the profitability of the investment. In the event that the company is public, investors use an estimate of pre-penez as a way to decide on the real value of shares in the company.