If you’re a fan of “Shark Tank,” you’ve heard the term “valuation.”
Pay close attention to the ABC show’s dealings, and you may have figured out its basic formula for determining valuation: The amount of money the entrepreneur is asking for combined with the percentage of equity they’re offering represents the value of the company.
So, if the entrepreneur is asking $100,000 with 10% equity, $100,000 is 10% of the company’s valuation — which in this case is $1 million ($100,000 x 10).
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