1. How startup valuation works

2. How startup valuation works
Early Stage
Growth / scaling Stage
Exit Stage

4. Early stage “Valuation” does not show the true value of the company
It shows how much the company investor gets for her money
Founders with success in the past tend to get higher valuations (they give up less of the company in early stage than first-timers)

5. Early stage Valuation depends on how much money you need
You need ENOUGH money to
Run 3 experiments and
Have at least 6 months of runway
Investors want to see growth within 18 months

6. Early stage Valuation depends on who you take money from
Average valuation
$2.6M
$1.5M
$1M
$400k
Average investment
$640k
$300k
$100k
$20k
Dilution
20%
16% 9% 5%

8. Scaling stage
Investors find similar companies to determine their value to revenues ratio – then use it to calculate value of your company
Revenueoc/valuationoc ~ Revenueyou/valuation?
Take revenues this month, year, next year
Calculate best, worst, and base cases
Triangulate 3 cases
Project when startup will exit
Discount earnings by time value of money