From: "Gary Britt" 

Congrats and good luck.

What's the present value of the reasonably anticipated net profits over the
next ten years, and what's the probability of achieving those results? 
That will give you an idea as to value .  What's the value of
your services and time to produce the product and get it ready to ship? 
That will give you an idea of the amount of dollars you are putting into
the deal versus the investor?

Tony is right about getting a good business lawyer to help you on this. 
You need to make sure you understand who owns the IP rights, including the
rights to commercialize the work in future endeavors, right to source code,
right to license the property, IP, etc. to others, right to control
derivative works, etc.  You also need to watch who is going to be head of
company with right to hire and fire and make ultimate management decisions.
The form of the company, corporation, partnership, other type of entity,
can affect these various rights and obligations.  You may need an
employment contract with the company, that may or may not need to be
guaranteed by the investor.  You need to watch how and to whom stock
options or other optional ownership rights are handled.  Preemptive rights
(i.e., the right to maintain your same ownership percentage as new
stock/investors are brought into the deal in the future) need to be
considered.  If you aren't in control of the entity and the entity offers
new stock/ownership interests, even if they have to offer the new interests
to you first, will you have the money to buy?  If you don't, after going
through the motions of offering to you first they can sell to themselves or
others, effectively diluting down your ownership percentage.  What are the
applicable rules concerning a merger of the company with another company
going to be?  What about a sale of all or substantially all of its assets
to another company, what then?

I could write many pages about all this.  Best thing is to get a qualified
business lawyer to help you.

Good luck,

Gary

"Antti Kurenniemi"  wrote in
message news:4422de95$1{at}w3....
> Today I just got offered a considerable (well for me anyway) sum of money,
> to fund my software business. Wowzat, that's cool! I've been battling to
> finance my development (I'm doing a small-business crm/time
> planning/invoicing/whatnot type of application) by doing support gigs and
> all sorts of odd jobs, and this would really make all the difference in
the
> world. I'm so excited that I can hardly stand (or sit) still.
>
> Anyone have any hints / ideas how to value a software (business) before it
> sells anything? I'm left with a decision: I have to offer a percentage of
my
> company to the investor, and I haven't got a faintest clue as to how big a
> slice I should offer - too big and I'll regret it for the rest of my life,
> too small and they'll just shoot off leaving me empty handed... Damn, why
> aren't cool things ever easy . Well, no worries, I'm pretty sure I can
> trick them into telling me what they have in mind, and then I'll just
divide
> that by two, and that should be about right.
>
> Wopee! Beers are on me the next time you're hereabout!
>
>
> Antti Kurenniemi
>
>

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