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Silly valuations based on small investment for very small equity?

If I have a startup with a million shares that are currently only worth a total of $1.

At a later time, someone invests $10 in my startup for one share.

Theoretically does that makes my startup now worth $10MM (post)?

What do investors think of such small investments for small number of shares?

This is an extreme case but we could see something like $50K for 1% equity (equivalent to $1MM for 20%).

 

  • This is not the only way analysts make decisions.

    A solid evaluation is discerned from a weighted average found using various evaluation techniques. Various factors include the number of Phd’s are working on your project, your cash flows, your revenue, market size, number of salary employees, number of people employed globally, patents, trademarks, other protectable intangible assets, and contracts.

    But 50k for 1% could be a valid evaluation, but it is highly dependent on all of these variables I mentioned before.

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