If you're starting a new company and looking to secure venture capital (equity financing) you may have already come up against the challenge of having to define the valuation of your company.  Actually, it's not likely much of a challenge for you at all because at the end of the day, the VCs are going to call the shots and the valuation they come up with will be the valuation you come up with (wink, wink). 

But what if you're raising some money from friends and family, or even Angel investors, and you need a valuation for the purpose of determining how much equity to give up for the money being invested?  Also, what if these ultra-early investors have expressed grave concern (as they should) about their equity position being diluted (worth less) once the VCs get involved at subsequent financing rounds.

Here's an article on convertible debt financing - a financing strategy every entrepreneur should be aware of.

http://tinyurl.com/22uglh