Whatever you think your company is worth, you can bet that the investor will think it is worth less.
On Friday, July 24, the BCTIA held its weekly Grub in the Hub lunch and learn event, entitled Financing Options for Growth. The presentation was delivered by Jane Murdoch and Colin Ground, Partners with prominent law firm Cassels Brock and Blackwell LLP, which has worked with numerous high-profile tech companies.
‘What is the business worth?’ is the first conversation a founder can expect after the friend and family seed investment stage. “That’s the first challenge you’re going to have,” Ground said. Most of the time, “what you think your company is worth is not what the investor thinks your company is worth.”
Ground continued, “At the end of the day, what you’ve got to assess is, even though I think my company is worth X and I’m being told it’s worth Y, if I don’t have this financing partner involved, am I really going to grow my company? I have 100% of my company right now. I might have to give up some of that, but now I’m getting real money in, and it’s validating my business, and if it validates my business and I perceive it as a benefit to me, it’s going to only grow my overall valuation going down the road.”
“It’s a discussion and a fight you’ll have, but with the right partner, even though the valuation will likely not be where you want it to be, with the right partner, you’ll get to a stage where you’re exceeding your expectations,” Ground said.