http://www.startupcompanylawyer.com/2007/05/21/how-do-you-calculate-series-a-price-per-share/ Venture capital, seed financings, convertible note bridge debt, M&A, option vesting and other matters explained for founders and entrepreneurs Tue, 10 Aug 2010 22:20:47 +0000 http://wordpress.org/?v=2.9 hourly 1 http://www.startupcompanylawyer.com/2007/05/21/how-do-you-calculate-series-a-price-per-share/comment-page-1/#comment-470 Yokum Sun, 30 Dec 2007 22:03:49 +0000 http://www.startupcompanylawyer.com/2007/05/21/how-do-you-calculate-series-a-price-per-share/#comment-470 Conceptually yes, but the situation is different. In a venture financing, the valuation is set by an arms-length process. In setting the valuation of the company to determine how many shares to grant to a service provider, the valuation is likely not rigorously challenged. Thus, while it is theoretically correct to include options and warrants, most people receiving the equity are not sophisticated enough the challenge the underlying assumptions. Conceptually yes, but the situation is different. In a venture financing, the valuation is set by an arms-length process. In setting the valuation of the company to determine how many shares to grant to a service provider, the valuation is likely not rigorously challenged. Thus, while it is theoretically correct to include options and warrants, most people receiving the equity are not sophisticated enough the challenge the underlying assumptions.

]]> http://www.startupcompanylawyer.com/2007/05/21/how-do-you-calculate-series-a-price-per-share/comment-page-1/#comment-469 Jim Black Sun, 30 Dec 2007 17:55:50 +0000 http://www.startupcompanylawyer.com/2007/05/21/how-do-you-calculate-series-a-price-per-share/#comment-469 I have a related question. I am CEO of a company that is still at the "friends and family" funding stage. In addition to the common shares that are owned outright by the founders, we have issued some warrants and we have also established a pool of common stock to be used as equity compensation. My question is: should we count the warrants and the option pool in determining the price per share as we compensate people with equity? I have a related question. I am CEO of a company that is still at the “friends and family” funding stage. In addition to the common shares that are owned outright by the founders, we have issued some warrants and we have also established a pool of common stock to be used as equity compensation. My question is: should we count the warrants and the option pool in determining the price per share as we compensate people with equity?

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