If you are trying to raise money for your innovative startup at some point investors will ask “What's your pre-money valuation?”.
Now, you could just plug a number out of thin air and hope for the best.
But savvy investors want to know they can expect a 10x return on their invested capital, so they will dig deeper and try to understand how you got to that startup valuation.
If you can't argue and convince investors that at this valuation they are still likely to get a great return, then investors won't write you a check.
In order to make it super easy for you, I've written about different methods for valuing your startup including the most commonly used method used by venture capital investors in my startup valuation guide.
The seven methods to calculate your startup’s value
Valuation method #1: Comparables or Multiples
Valuation method #2: Conformity
Valuation method #3: Discounted Cash flow (DCF method)
Valuation method #4: Venture capital method
Valuation method #5: De- or re-construction
Valuation method #6: Combination
Valuation method #7: Competitive loss
To read the full guide click here:
~Guest Post written by: Martin Luenendonk
Funny dude who grew up in Houston, and retired from Mechanical Engineering at the age of 33. Has 3 kiddos and happily married and marketing full time since 2012.
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