Valuation For Startups – 9 Methods Explained

A startup is like a box. A very special box.

The box has a value. The more things you put in the box, the more its value increases. Add a patent in the box, the value increases. Add a kick-ass management team in the box, the value increases. Easy, right?

Your startup is now worth 2. Yay!

The box is also magic. When you put $1 inside, it will return you $2, $3 or even $10! Amazing!

Problem is, building a box can be very expensive. So you need to go and see people with money — let’s call them investors — and offer them a deal that sounds a bit like this:

“Give me $1M to build a box, and you get X% of everything that comes out of it”

But how much should “X” be?

It depends on the Pre-Money Valuation, e.g. the value of the box at the moment of the investment. But calculating the Pre-Money Valuation is tricky. This article will take you through 9 different valuation methods to better let you understand how to determine Pre-Money Valuation.

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