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Interlude: A Side Note on Venture Deals

Dashboard > Chapter 2: Growing and Raising (Capital) > Interlude: A Side Note on Venture Deals

Interlude: A Side Note on Venture Deals

Brownie Points: How Venture Deals Work From The Inside

Not needed for the Series 7, but of some interest for those who care about the venture capital business and start-ups, the math behind these 409a valuations works like this:

Recall the thought process behind Reid's initial investment of $500,000 as preferred, not common, stock into The Sauce Company. Reid wanted to be first in line and ahead of A and B. When companies raise money on terms like this, the numbers are elusive. In theory,...

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