

Ask HN: SAFE and vesting: how do you value the company when a cofounder leaves? - throwaway_cto

Help!<p>I&#x27;m a CTO and cofounder of a company that I want to leave because of a massive fallout with my cofounder and CEO.<p>We raised a seed round using SAFE convertibles notes at a 8 to 10M value cap. I&#x27;ve vested half my shares in the company, HOWEVER, under our shareholder agreement the company has the right to repurchase my vested shares when I leave, at &quot;market price&quot; (yes I realize it was a HUGE mistake).<p>How do I go about valuing my shares? The money we raised doesn&#x27;t automatically value the company, so I&#x27;m at a loss how to proceed and get some value out of the 2+ years I&#x27;ve built this company.<p>Please help!
======
nostrademons
Does the company have revenue? Follow-on priced funding rounds? If you've
taken follow on priced rounds (eg. a Series A), then the price those
shareholders paid is the market value, eg. if your Series A values the company
at $15M post-money then it's worth $15M.

If you have actual financials (revenue, profits) then you could argue
(although the company is under no obligation to accept...consult a lawyer)
that there are fairly standard methodologies for valuing a company on a
financial basis. I've heard the figure of 4x annual revenues thrown around, or
you could use the S&P 500 market P/E of 19x profits.

If you have neither earnings, revenues, or follow-on financings, you need to
accept that you have created nothing of value in the past 2 years, and you are
entitled to nothing of value. This is the deal we make when we decide to
become startup founders, and the reason why so many people choose to keep
their safe corporate jobs. Consider it a learning experience, and then look to
apply that learning in more profitable ways in the future.

