|
|
|
|
Startup market valuations (early stage)
|
|
3 points
by AmirSani
1997 days ago
|
|
|
How are early-stage founders estimating their market valuations? Sites like Crunchbase, DealRoom and Pitchbook report recent valuations from news and PR. There valuations are generally averages. What are the founder valuation steps?
1. Track top k relevant startup competition.
2. Approximate around competitors? Guess based on rule of thumb? Ask advisors? Ask existing investors? Guess? |
|
|
Priorities and weights: 1. (.25) Team (commitment, experience and expertise)
2. (.25) Market (size, accessibility, approach)
3. (.15) Product status (a. Concept b. Lab prototype c. Demonstrable prototype (alpha) d. Testable proto-product (beta) e. Market-ready (MVP)
4. (.15) Traction (a. No users b. 10-100 users/customers and/or award(s) c. 100-1000 users/customers d. More than 1000 users/customers
5. (.1) Revenue (a. No revenue b. Grant, SBIR or other c. Product revenue < $100k d. Product revenue $100k - $250k e. Product revenue > $250k
6. (.1) Gut instinct
A = a multiple on revenue (depends on industry)
0-12 months: $0 to $2.5 million. ($2.5MM * weight)
12-18 months: $0 to ~$3.5MM (A + $2.5MM * weight)
18-24 months: $0 to ~$5MM (A + $3.5MM * weight)
24-36 months: $0 to ~$10MM (A + $5MM * weight)
This is just my rough approach, and it’s not always appropriate. Based on some experience and where I invest, I would say it probably applies for most of the US other than Sili Valley or other Western US startup hubs where investors are more “optimistic.”