How to Value a Pre-Revenue Startup

For a startup with revenue, valuation leans on multiples. For a pre-revenue startup, there is no revenue to multiply — so valuation becomes a negotiation informed by a few rough methods. Knowing them helps you anchor the conversation instead of accepting whatever number an investor floats.

The methods investors use

• •Comparables — what similar startups at your stage and sector raised at recently. The strongest anchor in practice.
• •Scorecard method — adjust a regional average pre-money valuation up or down based on team, market, product and traction.
• •Berkus method — assign value to a few risk-reducing milestones (a sound idea, a prototype, a quality team, relationships, early sales).
• •VC method — work backwards from a plausible exit value and the investor's target return.

What actually drives the number

Methods give you a range; these move you within it:

1. 1.Team — have you done this before, and can you execute?
2. 2.Market size — is the prize big enough to matter?
3. 3.Traction — any signal (users, waitlist, LOIs, early revenue) de-risks the bet.
4. 4.Defensibility — what stops the next team from copying you?

Pre-money, post-money and your stake

Whatever valuation you agree, what you keep depends on how much you raise against it. Run the numbers with the dilution calculator and our dilution guide before you sign.