What's the lowest offer you'd take? • Hacker News Board

Re: What's the lowest offer you'd take?

#41

Post by ralph » Fri, Mar 23, 2007, 12:10 PM UTC

jadams wrote: post #24

herdrick wrote: post #18

Earlier quoted context omitted.

"Taking a $1M lump-sum means never having to work again." Sorry, no.

Well, obviously, this is for some reasonable definition of have . The numbers work for me. I'm married, and have a mortgage. I guess I was blurring the line between being retired and semi-retired. Were I to earn such a lump sum, my daily activities would probably look the same. I just wouldn't be working for anyone else, and wouldn't have that mental burn-rate / countdown timer going. Controlling expenses is a very p…

Good points, but I'd urge paying off the mortgage before (4). Paying it off twenty years early saves a wad in the long run. And not having mortgage payments as a recurring monthly drain makes (4) easier.

Re: What's the lowest offer you'd take?

#42

Post by ralph » Fri, Mar 23, 2007, 12:14 PM UTC

pg wrote: post #14

zkinion wrote: post #6

Why do you have to take an offer at all? It normally takes anywhere from 1-2 years to make a site successful enough to justify selling for a gargantuan amount. In 3 months, how much growth can you get to show enough promise of future growth/monetization?

Enough, obviously, because we've had several startups that got acquisition offers after three months.

Any takers? I'm not after names, but numbers.

Re: What's the lowest offer you'd take?

#43

Post by ced » Fri, Mar 23, 2007, 2:17 PM UTC

70K net, if the alternative is a 20% chance of getting rich after a couple of years. 70K is below YC's average initial valuation, as I understand it. I wonder how much it would bother them... 70K is enough to live like a student for 10 years in a low-cost region, to learn and work on just about anything.

Re: What's the lowest offer you'd take?

#44

Post by chandrab » Fri, Mar 23, 2007, 4:29 PM UTC

Guys, when formulating your magic number in your head, not forget to include taxes...that's up to 50% gone right there. So your $1M is now $500K. I speak from experience on this. It's a good story over a beer.

btw - Did you know the SEC is going to pass a rule that no longer considers people with $1M in assets "rich", they are changing the bar to $2.5M...this was in last week's wall st. journal.

This is a tough one to answer since I am committed to my idea, and while money is important I want to see it through. To an investor though, their goals are to get out as soon as they can with as much as they can. Obviously you can't have a $100M company in 3 months, but you could have something that gains A-round valuations from a VC.

Re: What's the lowest offer you'd take?

#45

Post by far33d » Fri, Mar 23, 2007, 5:13 PM UTC

JMiao wrote: post #40

far33d wrote: post #37

Earlier quoted context omitted.

I realize... My point was that some of the buying companies have been willing to buy companies that traditionally would be raising their first rounds. A classmate of mine sold his company to Fox Interactive for $7m (reportedly) before they'd even LAUNCHED.

I'm guessing NewRoo?

You guessed right

Re: What's the lowest offer you'd take?

#46

Post by dageroth » Fri, Mar 23, 2007, 7:05 PM UTC

pg wrote: post #15

bhb wrote: post #2

We're working hard on finishing up our YC application, and we're having a lot of problems with this one: "If one wanted to buy you three months in (August 2007), what's the lowest offer you'd take?" First of all, what if we're not particularly interested in selling the company that fast? Should we just put some ridiculously high number that no one would actually pay? Also, the numbers would seem to vary significantly…

"Approaching the question?" How about just answering truthfully? What would someone have to offer, assuming nothing else about the deal? If you put some high number no one would offer, you're not really answering the question, are you? If you say you'd need 20 million, I'm going to ask: so if someone offered 19, you'd say no?

Hmm, I think with that argumentation you'd get a slippery slope argument. "If you take 19 Million Dollars, would you say "no" to 18999999$ ?" Of course not, and this argument can be continued. Therefore the value one can state is surely one that gives a rough sense of the amount of money that one would take for the company, a fuzzy value. Of ocurse most people would be willing to take a lesser amount, but when they state the lesser amount, they'd probably take even then a smaller sum again.

And of course if an investor would be willing to invest 19 million than he would probably be willing to invest 20 million as well... after having established the rough amount of money one would take the outcome seems to depend on negotiation skills. And to betray the actual lowest amount one would take might weaken one's own position ;-)

Re: What's the lowest offer you'd take?

#47

Post by dageroth » Fri, Mar 23, 2007, 7:16 PM UTC

I'd say that not the amount of time spent on the development of the software is the crucial question but the expected earnings. If the idea is really novel or promising and the expected revenue huge than an investor is paying for the idea and probably the team and not for the work done in these three months. If the team consists of gifted inviduals and a great idea than it seems to me not to utopian to accept only a very high sum because it is rather rare to have a very promising idea and gifted people together.

Re: What's the lowest offer you'd take?

#48

Post by Constantine » Sat, Mar 24, 2007, 7:07 AM UTC

dageroth wrote: post #47

I'd say that not the amount of time spent on the development of the software is the crucial question but the expected earnings. If the idea is really novel or promising and the expected revenue huge than an investor is paying for the idea and probably the team and not for the work done in these three months. If the team consists of gifted inviduals and a great idea than it seems to me not to utopian to accept only a…

I would have to agree, the problem is when you have to self measure a potential projects earnings before it comes into a large circulation.

I think it would be very easy to over/under estimate a projects worth, personally I would think that a percentage of profits over a certain period of time plus a smaller lump sum would be ideal for me.

I am a little new to this game but I would assume it would also increase my motivation to see a project come to fruition if I had a more longterm stake in it.

Re: What's the lowest offer you'd take?

#49

Post by whacked_new » Sun, Mar 25, 2007, 9:40 AM UTC

jadams wrote: post #5

sethjohn wrote: post #4

Earlier quoted context omitted.

A good way to start might be the rule of thumb that startup investors typically want a 10x return on their money (for companies that succeed). If YC invests $20K in your company in return for 6% of the company, and the company sells for 3.3 million, they get 200K. Our three founders came up with a number in our own heads, then we agreed on something in the middle...which turned out to be pretty close to 3 million. As…

Er. I recommend not immediately pissing away $200K, but that's just me. If you're in your early 20's, a $200K investment could easily be $1M by your thirties. Taking a $1M lump-sum means never having to work again. That's not to say you won't work again, or won't be productive again. But I'd feel really stupid if at some later date I had to take a job, just because I pissed away my capital.

A 4-fold increase is no small thing to pull off! You'd be betting on some real shrewd money management and investments.

Re: What's the lowest offer you'd take?

#50

Post by pg » Mon, Mar 26, 2007, 8:32 PM UTC

ralph wrote: post #42

pg wrote: post #14

Earlier quoted context omitted.

Enough, obviously, because we've had several startups that got acquisition offers after three months.

Any takers? I'm not after names, but numbers.

At that stage they're mostly lowball offers, never more than about 2 million. No one took one.