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Ask YC: Negotiating with Friends/Family/Fools for the first round.

2 pointsby enkiover 17 years ago
Hi,<p>We're about to close a 70K EUR Round with friends (in packages of 10-20K), which we plan to use to test our marketing assumptions, and launching the first city, for a finished product.<p>Bigger cash seems to be available only with strings attached (e.g. 100k now, 1.5MM later for 40%), and there are few good Angels in Europe.<p>It's not just hard to pitch, it's much harder to find someone to pitch to.<p>Our current self-valuation, which we think is very reasonable, even when accounting for interest and risk, is 1.5MM.<p>How would you guys go for arriving at a valuation with friends?<p>We're prepared to give them a significant discount, but we'd like to avoid haggling.<p>Do share your experiences!

4 comments

rmsover 17 years ago
What about convertible debt? If you plan on raising more money, this can be good for your early investors, because it's protects them from dilution.
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anamaxover 17 years ago
Giving them a discount devalues their investment and reduces the odds of success.<p>Why do you want to do that to friends?
sharpshootover 17 years ago
There are fewer angels in Europe. Doesn't mean that there are none. I presume enki you are from Germany?
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rmsover 17 years ago
Also, your friends said no to your 1.5MM valuation?
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