We did this by thinking hard about the risk that we had in front of us versus the amount we were being offered for the company. Personally, I also considered the offer in the context of the dilution we would face as we attempted to build revenue and move to cash flow breakeven. We had lots of clarity on that dilution, as we had a $25MM Series B financing in escrow when we sold. With a refresh of the option pool that amounted to 40% dilution, which meant that to our existing shareholders the $95MM offer was the dilution adjusted equivalent to $160MM offer after our next round. In other words, existing shareholders would have the same return after the financing only if we could clear that hurdle.
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Selling Out - Anything’s Possible Sawickipedia: Great post on value of selling “early” as entrepreneur - the dilution adjusted valuation is a very, very important way of thinking about. |
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