When receiving your first 409A valuation after your Series A round by an outside firm, what is the best way to determine if the calculated share price is reasonable (too high potentially) or not?
409A Valuation - Share Price Calculation
Answers
Brett, you need to review the assumptions related to the valuation. If you hired a qualified consultant, the report should have at least two or three methods for valuation. If you honestly believe the valuation is wrong then reach out to another consultant but first, understand what the assumptions are behind the valuation.
Usually there is a range of valuation you should be comfortable with finding a point within you can acceptably defend. After the Series A it is common for the valuation to be much higher than before, given the investment itself and better information on comparable fundings.
As a contextual comment......It is easier to swallow a "potentially high" valuation than a down round.
Thank you everyone