The Entrepreneurs Guide to Start-up Valuation

🚀Start with the cash

If your start-up is at the point where you have revenues, this is where you should start. Your balance sheet should give you an idea of the money coming into your business, as well as the value of your assets. This dollar figure can be used as a baseline for valuation as it tells you how much money is already in the business.

📊The Berkus Method

The Berkus Method is a simple way to quickly value an early-stage start-up. It uses five factors to give a business a valuation between $500,000 and $2.5 million.

📊Comparable Transactions Method

The Comparable Transactions Method derives valuations by looking at comparable businesses. While the Berkus method is good for a quick but rough evaluation, the Comparable Transactions Method gives a stronger measurement based on precedent.

📊Scorecard Valuation Method

This is another good way to value businesses before you have revenues. This again asks you to compare similar businesses, this time at their pre-money stages. You then break down the valuation into different categories and compare your business with theirs at that same stage.

Ask for help

It’s important to evaluate your start-up with unclouded judgment, which can be difficult if you’ve been close to your project for a long time. Taking a step back and trying to be objective is important, and it often helps to get the opinion of a trusted advisor or Angel investor wherever you can.

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