Startup Funding Espresso Valuation Methods To Consider
Valuation Methods To Consider Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In preparing your fundraise you need to consider your current valuation even if you\u2019re using a SAFE or Convertible Note. There are several methods to use to estimate your valuation. The most often used method is comparables. This method looks at similar companies that recently raised funding and uses that as a proxy for your startup's valuation. It can be a challenge to find companies that fit exactly but if you generalize into tech, healthcare, consumer product goods, etc, you can find comps for your startup. You can also use the rule of four which gives your startup a $1M valuation for each of four points: sales, team, product, and intellectual property. Give your startup the full $1M if you have each category fully developed.\xa0 If it\u2019s less than fully developed then give your valuation a portion of it. For example, if the product is fully developed and ready for the market then it\u2019s $1M. If on the other hand, it\u2019s in beta form with some functionality then give your valuation $500K.\xa0\xa0 Add up all four numbers to calculate your valuation. There are other methods such as the Berkus method which uses a scorecard and the venture capital method which looks at the exit price and works back to your current valuation.\xa0 It\u2019s best to try several methods to see which one puts your business in the best position. In the end, valuation is a negotiation and not a formula. No matter what valuation you propose the investor will challenge it so make sure you have solid evidence of your proposed number. \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .