Founder’s Pocket Guide: Startup Valuation
This updated edition includes several new features, including:
- The Startup Valuation Explorer
- Expanded coverage of valuation methods
- Responses to investor questions about your valuation
- Details about option pool impact on your valuation
For many early-stage entrepreneurs assigning a pre-money valuation to your startup is one of the more daunting tasks encountered during the fundraising quest. This guide provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by-step examples for several valuation methods.
- What a startup valuation is and when you need to start worrying about it.
- Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
- How investors view the valuation task, and what their expectations are for early-stage companies.
- How the valuation fits with your target raise amount and resulting founder equity ownership.
- How to do the simple math for calculating valuation percentages.
- How to estimate your company valuation using several accepted methods.
- What accounting valuation methods are and why they are not well suited for early-stage startups.
Download the Valuation Explorer File
Table of Contents
1. In This Pocket Guide
- Founder Pro Tips
- Download the Startup Valuation Explorer
2. Valuation Fundamentals
- How to Think About Startup Valuation
- Valuation Increases at Each Funding Stage
- Valuation and Funding Terminology
- When to Worry About Valuation
- The Basic Valuation Equation
- Calculating Investor Ownership Percentage
- Expressing Your Valuation to Investors
- Valuation and Raise Amount Sanity Check
- Early-Stage Valuation Pitfalls
- What is a Down Round?
- Determining Early Stage Valuations
3. Early Stage Valuation Methods
- The Market Comp Valuation Method
- The Step Up Valuation Method
- Risk Mitigation Valuation Method
- The VC Quick Valuation Method
- The VC Valuation Method
4. Option Pool Impact on Valuation
- True Pre-Money Valuation
- True Pre-Money Valuation Math
5. Responding to Investor Valuation Questions
- Your Valuation Is Too High
- Your Revenues Don’t Support Your Valuation
- You’re Too Early
6. Understanding Accounting Valuation Methods
- Quantitative Valuation Models
- Accounting Valuations Distilled
- Understanding 409A Valuations
What People are Saying
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