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Why Valuation is Overvalued, Part I: The Option Pool

Photo of Alon Y. Kapen
By Alon Y. Kapen on May 18, 2014
Posted in Capital Raising, equity, founders, full-diluted shares, Startup, valuation

In any seed or early stage round negotiation between a company and a VC, one of the first and most contentious issues to be negotiated is valuation.  A company’s pre-money valuation will determine how much equity will need to be issued to the investor for any given amount of investment, and thus on its face…

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