| We've received an offer to directly buy 51% of our shares, resulting in an early stage partial exit (not funding for company). I have a feeling that it's a fairly low offer, and I am hoping to get some insight from people who are familiar with these sorts of deals. EDIT: Sorry for following formatting, it was submitted as a hierarchical bullet list The facts as I see them:
- We founded our company 4 years ago (5 founders)
- Still 100% owned by founders
- Pivoted twice, each time reusing most of our previous work
- Saw some revenue after our first pivot, but found a better idea
- Currently based in Australia (would move to US though)
- First sale of current product this year
- 3 year contract with a total of over US$650K (in british pounds)
- To small/medium sized company in a very large worldwide industry
- we see this as a small deal, and discounted at that for our first client
- 50% of the revenue goes to a partner company that made the sale
- Many more sales in the pipeline, and bigger ones
- They've recently loaned us some money to support feature development
- In exchange for 3 year worldwide exclusivity on sales
- (Early stage venture funding very hard to get in Australia, and 4 years is a long time!)
- Loan payback conditional on them making sales
- We have Windows, OS X, iOS and Android clients for our product Our product is first to market and significantly more advanced than those of our competitors - we have the benefit of having worked on a related system for years before pivoting to this, whereas our competitors are coming from different backgrounds. Every company we've demonstrated to has been hugely excited about it - we save them time and money in a few ways. The standard software contracts in this industry are 3-5 years and for large sums of money. If you can accept all this at face value - what sort of back of the napkin calculations would you come up with for a valuation? I will answer any requests for more detail if I can do so without revealing who we are or too much about what we do. We're in stealth mode. Giving up control of our company isn't ideal, but the offer IS directly for the shares, rather than for being able to grow the team. You accumulate a few bills when you self-fund a startup for 4 years. Coincidently (really), I'm visiting friends in L.A. for the next two weeks. If any serious investor out there is interested in a demo and potentially working towards making an investment in our company I could meet. I would love to add a couple of engineers to the team and investors with the right connections could help us go after the relevant deals in the enormous US market for our product. Perhaps it's naive to ask this way in a forum such as this but I am our startup's core hacker - not the guy usually dealing with the business end. This post is not an indication of a rift in the founding team - I am simply a substantial shareholder in this and I have decided to collect data from a community that I respect. Either way, I am primarily concerned with finding out if the partial exit offer is reasonable or not. |