My name is Mohamed and I am the CEO of Vendigo and the founder of "Shoot it!", a social sports mobile app which is set to launch in Fall 2016. I am a 22 year old marketing student from Toronto, but an entrepreneur by heart. I believe I have developed a concept that will revolutionize the social sports video-sharing industry. While learning more about the industry itself, I also have found a void in the market and I intend on capitalizing on it. I am in that pre-development stage where I have a business plan, a targeted marketing strategy, and a business model that will prove profitable.
I am looking to raise 75k CAD to develop and market my app. What is the value of my startup? How much equity should I give away?
Great at the age of 22.
Your concepts is really nice and extraordinary, it might you face a lot of compositors already but still you do your revolution your way.
About value of startup.
If your are calculating your startup >>
Investment is the 1st part + Estimated yr. Revenue after the investment + calculate the per user revenue(future esimation) + Your strategy investment, resources, planning marketing, infra and all major minor which you consume in the startup
I would make it easy on yourself and your investor and take the investment as a convertible, in particular since it is a small amount. That way you defer the valuation discussion.
Early stage valuations are never scientific. What I would say however is that its increasingly challenging to get outside capital (apart from fff-funding, Friends, Fools and Family) for any concept, idea or development-stage idea. An early indication of promise and ability to execute on behalf of the entrepreneur is the ability to put out an MVP or a first phase product onto the market with little or no outside funding. This brings back to the valuation. For a pure idea-stage company with no product on the market and therefore no metrics, I would be shocked if a pre-money valuation would exceed $500k. If you already have an MVP on the market, have been able to demonstrate traction etc, then those things tend to influence your valuation. As does obviously the local availability of capital. For any pre-product/market fit startup however, an early-stage valuation rarely exceeds $4m. Another option to "postpone" the valuation discussion is to take in the capital as a convertible note with a cap. The cap should be something you believe you can exceed as the valuation for the next round of funding.