How Do You Price Your Startup’s Next Round Of Funding?

Years ago, when I was an Entrepreneur in Residence at a San Francisco based venture capital fund, Dave, the partner I worked with, and I met with the CEO of a semiconductor company looking for Series B funding. I knew the CEO and I knew the space his company was competing in really well which was why I was in the meeting.

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The company had accomplished a lot since they had raised their Series A funding. I was impressed, and I could tell Dave was impressed as well.

Near the end of the meeting, Dave asked Mark, the CEO, what he thought the company should be valued at for the next round. Mark calmly looked at Dave and said, “We’ll let the market decide what the value of the company should be.”

You’re doing the right thing when you let the market decide what your company is worth.

Dave smiled and said to Mark, “You’ve been coached well.”

With that one simple comment about letting the market decide, Mark had put the onus on the investors to make him an offer. And that’s as it should be because investors are the market for you company.

You are only likely to hurt yourself if you try and name your price.