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What is the difference between selling your home and raising money?

Sell your home

You want to sell your home.

So:

  • You set a fair price
  • To ensure you reach many potential buyers, you put your home up for sale on Funda
  • You sell to the first buyer who pays the price

Because there are many potential buyers, each buyer has an incentive to (1) pay fair price – otherwise some else will, and (2) act fast – otherwise someone else will.

The potential buyers compete against each other instead of against you.

Sell your shares

You want to raise money.

You ask 1 more or less random potential investor for a term sheet and a valuation.

What do you think will happen? (1) Will he lowball you? (3) Will he stack the deck by putting in favorable terms like anti-dilution and liquidation preference? (3) Will he take forever to decide?

You either accept his offer or go bankrupt.

You have zero negotiation power because you have no alternatives lined up.

Sell your shares – revisited

You want to raise money.

So:

  • You prepare a term sheet, which includes a fair valuation/price
  • You seek out 3-5 potential investors
  • You sell to the first investor who pays the price

Because there are multiple potential investors, each investor has an incentive to (1) pay fair price – otherwise some else will, and (2) act fast – otherwise someone else will.

The potential investors compete against each other instead of against you.

Product/service Price (ex VAT)
Help raise money (including valuation, seek out 3-5 potential investors) Success fee: 5.0% of investment
Valuation €300/valuation
Class How valuation works €600/class
Valuation apps Free