WingNews logo WingNews
top | item 22047340

(no title)

Lukeas14 | 6 years ago

I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know.

Because the founders get to keep more ownership of their company. If I take an investment of $100 million at a $1 billion valuation I own 90%. If the valuation is only $500 million I only own 80%. Why the company needs such a huge investment is a fair question but the insane valuation makes sense.

discuss

order

staticassertion|6 years ago

> Because the founders get to keep more ownership of their company.

At first that would be the case, but as the valuation drops (and becomes more realistic) wouldn't the founder lose shares, and the VC would gain more control due to non diluting shares?

smartbettor|6 years ago

No. but the investors would remove the founder.