Ep. 181 – Seed Funding 101: How Equity Valuations Work Part 2

SIBP-Blog-NEW-4If there’s one thing both keen-eyed investors and funding-hungry startups have in common, it’s their interest in making money. It’s this common interest that allows a company that is little more than an idea to find the seed capital needed to become a real-world business. But how does this process of discovering the value of a yet-to-exist business actually work?

In today’s episode, host and business coach Tom Ryan explains the alignment of interests between people with money and the entrepreneurs who need cash. As always, Tom is joined by co-host and producer Jason Pyles.

• Show opening, and Tom’s talent for eliciting exasperation

• Recap of valuations and seed-stage funding thus far (2:30)

6 Methods for Raising Money for Your Startup (and Their Tradeoffs) blog post (3:00)

• The role of valuations in equity-based funding (4:30)

• How do startups get funding? (5:00)

• Investors are good at recognizing future value (5:30)

• A business is worth what the buyer and seller agree that it’s worth (7:00)

• Aligning interests during valuations (8:30)

• What does the entrepreneur actually need from the investor? (9:00)

• What does the investor need from the business? (11:30)

• Money as the common ground between entrepreneur and investor (12:00)

• Grants may be the only exception to money-driven investment alignment (13:30)

• Next episode: How valuations happen

• Sign off, and how to contact the show

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