I've been working on some project on my free time for the past few months. Recently I've been approached by friends to build a startup, and this source code would be very valuable to us.
As a co-founder, this code could count for something in the company's capital, and be exchanged for shares. But how can you estimate its value? Do you just multiply industry-standard wages by the time I spent on it, or are there other methods?
Best Answer
The COCOMO system has within it a model for estimating the time to write software. As time is money, you then also get the value of the software from the perspective of "how much would it cost to have someone write it". The current formulation of this model is the COCOMO II which has a rather nice web tool.
With this web tool, one can go from an estimation of size (you don't have an estimation, you've got actual numbers of how big the code is...) and get the estimated planning, testing, and development costs.
Assuming 20k sloc (source lines of code) and a value of $10k/month for developer (and all other things being nominal) you get an estimated time of 79.3 person months to do it (remember, this is planning, construction and testing) for a value of $793k.
This value should be considered to be the minimum of the worth of the code. The actual value would be higher because it generates revenue and is the core intellectual property of the potential company.