InstantForum.NET v4.1.3VC Fodder Forumshttp://forums.vcfodder.com/admin@vcfodder.comThu, 21 Aug 2008 20:48:55 GMT20http://forums.vcfodder.com/Topic1039-5-1.aspxHello, <br><br>Myself and some friends are working on starting up a new services company in a market we know, though not necessarily as entrepreneurs. We've already found some interested investors who want to provide us with our first six months of operating costs, including salaries, in exchange for a lump of equity, and return of funds at some point (yet to be determined) after we become profitable. <br><br>Given that we're a services company, I can't find any valuation models that talk about how to a valuation or equity division - the company effectively has no value on starstartuprt from its employees and what's in their little heads. The only suggestion we've had thus far is a model where we split equity along a ratio like so:<br><br><investing sum from VC> : <"lost" salaries of employees><br><br>Where the "lost" salaries is the total of the difference between what the employees WOULD have made in their normal jobs and what they will make in the cut-down world of a startup. Obviously in such a model, the employees are going to be eating a lot of beans to maintain 50% equity.<br><br>Any suggestions on an equity-splitting model for such a situation? Both sides of the agreement would love any advice!<br><br>pb<br>Tue, 08 Jan 2008 16:35:01 GMTPolarBeer