I run a small FB app that is getting a bit of attention, and I’m constantly being emailed asking if I’d like to sell. I don’t want to at present. I am really loving building it up,
and I know it will grow fast and be worth a lot (well, I hope). Either way, how does it work? A couple of people have asked about investment, and I honestly don’t know how it works. What does one do in this situation? How do you know what your app is worth? What are the ups and downs of investment versus outright selling, and what if they want
you to stay on?
by Naomi Kokubo, Cofound of Founders Space
That’s a nice problem to have. Here’s what I can tell you. If you’re enjoying building up your business and you feel it can be worth a lot more in the future, then don’t sell. For a company like yours at this point in time, there is no clear valuation. It’s worth whatever someone is willing to pay for it. Once you start to become profitable, you can estimate the value as a multiple of earnings. But that’s probably a ways down the road for you.
As for investment, you should talk to an experienced corporate lawyer before considering any investment opportunities. First, you need to make sure your company is structured correctly. Second, you need someone to negotiate the deal on your behalf, and you want someone who has done this many times before.
As for your last question, most investors and buyers will want you to stay on. But this isn’t always the case. It’s negotiable, and you can discuss this with them and come to an agreement in advance that suits both parties.
I hope this helps!