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My two co-founders left and I am now working on my startup alone. But they vested about 25% combined. They've agreed to let me buy out their shares.
We have minimal income ($100/month recurring), negative net YTD profit and a non-scalable MVP. Most of the value is in the idea and name. None of us invested any cash in the startup.
I need to figure out a fair valuation in order to calculate how much to pay them to buy them out. Any input about how to do this?
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Ed Kang
I've been in this situation, and usually, it boils down to negotiation and finding out what everybody thinks they're entitled to. But I'll be blunt: by the time that's done, I typically realize it's just easier to start from scratch, especially if there were no operating agreements outlining a breakup. Let's say they each want $10K because they see you're willing to buy them out (not saying they want to take advantage, but human nature tends to be opportunistic). Then, you must ask yourself if $20K is worth it because you would spend that same amount to make the same level of progress.
In summary, it's all pretty subjective by this point. I hope that helps. There are other methods that are more scientific. Please let me know if you'd like to learn more.
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