How to value my Startup? Template of different Methods.
Valuation of a business when it earns revenue and has a sufficient financial performance is modulated very well. But if your company is at the pre-revenue stage, the story is different. Recently, I wanted to set up a startup in Dubai for a Protech company. But suddenly I remembered that why should not we do the same business in London or Newyork? there are advantages and disadvantages to this decision. reading the methods below, you will know that location of the business is a parameter that is highly effective on the total valuation of that business.
There are different methods of valuation of the startups that I list below the most important ones.
1. Scorecard Valuation Methodology
this method is used mainly for pre-revenue companies.
first step: determine the average pre-money valuation of pre-revenue companies in the region and business sector of the target company.
The average (mean) pre-money valuation for recent pre-revenue deals in the US is $2.1 million. while for sure the same business will have a much lower valuation in Dubai or India.
Step 2: compare the target company to your perception of similar deals
0–30% Strength of the Management Team
0–25% Size of the Opportunity
0–10% Competitive Environment
0–10% Marketing/Sales Channels/Partnerships
0–5% Need for Additional Investment
Step 3: Valuation by comparing with the Average Company
so in this example, the price for negotiation will be around 1.0750* 2 million (result of the survey). hence the pre-money valuation will be 2.15 million.
Here you can find the Excel Templates for Startup Valuation.