Hacker News Reader

Question, because I don’t know how this works. Who sets the valuation on a company?

Does a CEO have anything to do with that, or is it wholly external?

If you declare your company has a billion shares and I buy 1 for $1 then you have a valuation of... one BILLION dollars.

If I later buy 1 share for $2 then your valuation has doubled. That is basically SoftBank’s business model.

Basecamp even made a headline out of it a while ago: https://www.linkedin.com/pulse/basecamp-valuation-tops-100-b...

that article is hilarious!

> Basecamp is now a $100 billion dollar company, according to a group of investors who

> have agreed to purchase 0.000000001% of the company in exchange for $1.

Just wow, this is gold.

Valuation is based on what percent of shares an investor buys for how much. eg; if I buy 5% (0.05) of a company for 100$. The company valuation would be 100 / 0.05 = 2000$.

It can be a little more complicated with post and pre buy valuation, but that is the general idea.

Reply on news.ycombinator.com