Quick response needed!

[Matic]

Can someone help me figure out a way to value my website? What are the factors?

[akula]

you do a 2 year forecast of the revenues that you expect to be derived from this website, then you discount these revenues using a rate that reflects the possibility of these revenues being greater or less than what you forecast, and then you start pitching this value to potential buyers.

the price that they are willing to pay for this value is what you get

an important point: what you're looking for is not the value of a website but the value of an overall package which include rights to the code, the domain, hosting, brand recognition and goodwill (i.e. inbound links), support services, buy back rights, non compete rights, cross promotional rights with 3rd parties, and a number of other assets which you can include in the package to negotiate a higher sale price for your package

[Matic]

thanks for the quick response! I am trying to value my website not to sell it but to give to investors so they know what kind of return to expect in the future. Should I consider potential? What if I see it potentially being worth 2 billion dollars? Should my potential be only in the next 2 years? Should I still consider brand, domain name, etc? Thanks again!

[akula]

thanks for the quick response! I am trying to value my website not to sell it but to give to investors so they know what kind of return to expect in the future. Should I consider potential? What if I see it potentially being worth 2 billion dollars? Should my potential be only in the next 2 years? Should I still consider brand, domain name, etc? Thanks again!

yes you should. what you are trying to do is arrive at a premoney valuation.

a) do not say things like: "I see it potentially being worth 2 billion dollars"

(for a lot of reasons)

b) stop saying "I am trying to value my website"

(you are not valuing a website, you're valuing corporate securities)

there's a lot more you need to know in order to arrive at a premoney valuation which achieves your objectives

I gotta go now, but you can keep this thread live (by posting to it) and I might tell you other things

[Matic]

Hello. I could use that detailed help, thanks in advance.

[akula]

okey dokey...

so you need to finance your startup

you think private equity is a good option

you wanna arrive at a premoney valuation which doesn't make your startup look too cheap or too expensive.

you've incorporated the venture and are ready to sell common/prefferd stock to achieve your financing objective

is all this correct?

[Newton]

Yeh that sort of thing is tough Matic unless you have revenue and can show consistent growth (plus other things) - if you want people to believe your business is worth tons and tons of $. otherwise there's more guess work

Anyway, Akula seems to have this one covered

[Matic]

I have not incorporated yet, is this necessary? Also, is there a good step by step kind of book I can read to do this the right way?

[akula]

Yes, incorporation is necessary.

You need to incorporate.

It works like this:

a) you go a website and choose the LLC option
b) you'll transfer an amount of money into the company's bank account (i.e. $100)
c) You'll nominate how many ordinary shares the company has issued (i.e. 100). Therefore, the nominal value of these shares is $1 each
d) Then, you will need to try and sell some of these shares to your investors. You will need to tell them that based on the sweat equity (i.e. work) that you've put into the company, and the financial projections, the premoney valuation of each share is, for example, $1k. You will need to justify why the premoney value is significantly higher than the nominal value.

Then, the investors might want to spend $40k on this investment. If that's what they want to spend, the postmoney valuation is gonna be $140k (the premoney valuation + the investment). Therefore, $40k will buy them 28.5% (40k/140k) of the company (i.e. 29 shares).

If they want to buy more control for the 40k (i.e. 51% of the company), they will argue that the premoney valuation is too high and they want it to be lower, so the post money valuation is lower.

the point: you don't want to value your company in the billions because at this value, the investors will only be able to buy an insufficient share in the company.

That's plain vanilla equity financing

It gets A LOT more complicated

Sorry, can't recommend any books

Will certainly answer further questions

[Matic]

sweet thans for the response. I am going to do exactly what you say to do. Also, when I trade mark my company name, should I trademark just "example" or "example inc." Is this necessary before or after I incorporate?

Where should i incorporate?

Also, what do I do about buy back options? (In the future I would like to buy my company shares back)

Also, how do I sell only enough shares where I still own 51% of the company, meaning I make all the decisions, not my share holders collectively... Is this even necessary? Can I just sell 100%?

Thanks in advance,

--Matic

[akula]

I am going to do exactly what you say to do.

I would certainly get a second opinion. There's a chance that I'm delusional and stupid.

Also, when I trade mark my company name, should I trademark just "example" or "example inc." Is this necessary before or after I incorporate?

No, trademarking is not a prerequisite to incorporation. It might be a good idea though (if you plan on suing people etc..). "Example" would be fine.

Where should i incorporate?

I live in Australia. Here it doesn't matter. We have a single, federal securities registrar.

Also, what do I do about buy back options? (In the future I would like to buy my company shares back)

Complicated legal advice. I won't get into it.

Also, how do I sell only enough shares where I still own 51% of the company, meaning I make all the decisions, not my share holders collectively... Is this even necessary? Can I just sell 100%?

Complicated legal advice. I won't get into it.

Your last two questions are very important but I really shouldn't be commenting about these things on a whim.

Try to speak to securities lawyer who might help you out.

[Matic]

is it necessary to trademark both the name "Example" and the logo? Also, it has classes of trademarking where i have to trademark for every use of the logo, for instance on a HAT and a sweatshirt is completely different.... and on a website or on a frisbee. Is this the case with Austrailia also? Is this necessary? I don't want to pay too much money

[akula]

is it necessary to trademark both the name "Example" and the logo? Also, it has classes of trademarking where i have to trademark for every use of the logo, for instance on a HAT and a sweatshirt is completely different.... and on a website or on a frisbee. Is this the case with Austrailia also? Is this necessary? I don't want to pay too much money

Again, great questions, and they're all asking for legal advice.

I'm not an intellectual property lawyer, and I'm not in your jurisdiction.

I don't have any answers for you on this matter.

Try http://www.lawstudentparadise.com/

They've got some US lawyers there

[Matic]

So I did as you said and went to lawstudentparadise.com and I asked for some legal advice and they basically yelled at me for asking a question (No free legal advice here) Little law student pricks.

I think I won't be going back to that site.

Perhaps there is an All in one lawyer I can hire? Is there a name for this kind of lawyer, for instance, they do my trademarking, company incorporating, bank account setting up, etc.

I want to do my LLC in Las Vegas

[jhhardin]

So I did as you said and went to lawstudentparadise.com and I asked for some legal advice and they basically yelled at me for asking a question (No free legal advice here) Little law student pricks.

I think I won't be going back to that site.

Perhaps there is an All in one lawyer I can hire? Is there a name for this kind of lawyer, for instance, they do my trademarking, company incorporating, bank account setting up, etc.

I want to do my LLC in Las Vegas

Any law office should be able to handle this (Unless it is Osborn and Osborn, where "we only handle accident victoms")

Just ask for their business lawyer, or simply say, “I need to incorporate and would like assistance.” They will be all over you like white on rice.

PS. Be preparied to pay between $1500 to $5000 for the entire package. Study up, you can do a lot of this yourself. No problem.