Startup Valuation Calculator

Revenue multiple: Valuation = ARR × multiple. VC method: Post-money = Exit value ÷ required return; required return = (1 + target IRR)^years. Berkus: sum of up to five capped qualitative factors. Scorecard: regional average pre-money × weighted factor adjustments. Round: Post-money = Pre-money + Investment; Investor % = Investment ÷ Post-money.

Why early-stage valuation is a range, not a number

A mature company can be valued by discounting its cash flows, but a startup has little or no profit, often little revenue, and enormous uncertainty about whether it will work at all. There is no formula that produces the “correct” pre-money valuation — what a startup is worth is, in the end, whatever an investor will pay, set by negotiation and the supply and demand for the round. The disciplined response is not to pretend precision but to triangulate: run several methods, each with different assumptions, and look at where they cluster and where they diverge. The output is a range, and the range itself is the useful answer — it frames the negotiation and exposes which assumptions are doing the heavy lifting. The football-field chart here shows all four methods at once for exactly that reason.

Worked example — a seed company with 1M ARR: Revenue multiple: 1M × 8 = 8M pre-money. VC method: 100M exit ÷ (1.5⁵ ≈ 7.6×) − 2M investment ≈ 11.2M pre-money. Berkus / Scorecard (pre-revenue lenses): ≈ 2.5M each. The honest read is a range of roughly 2.5M–11M, not a single figure.

The four methods

The revenue multiple is the simplest where there’s revenue: ARR times a multiple drawn from comparable companies — it links directly to the revenue-multiple calculator. The VC method works backwards from the end: take a credible exit value, divide by the return the investor needs (a target IRR compounded over the holding period, often a 5–10× multiple), and that gives the post-money the round can support; subtract the investment for pre-money. It also reveals the ownership the investor must take to hit their return.

For pre-revenue companies, two qualitative methods dominate. Berkus assigns a dollar value (each capped, classically around 500k) to up to five risk-reducing factors — a sound idea, a working prototype, a quality team, strategic relationships, and product rollout — and sums them, which is why pure-Berkus valuations top out around 2–2.5M. Scorecard (Bill Payne’s method) starts from the average pre-money of recently funded comparable startups in the region and adjusts it up or down by rating the company against that average on weighted factors — team (30%), opportunity size (25%), product, competition, and so on. Both encode the same truth: before there’s revenue, valuation is a judgement about risk and potential, not a calculation.

Round mechanics: ownership, dilution and SAFEs

Whatever the pre-money, the round arithmetic is fixed: post-money = pre-money + investment, and the investor’s ownership is simply investment ÷ post-money. A 2M cheque into an 8M pre-money company buys 20% (2M ÷ 10M post). Founders are diluted by that 20% plus whatever option pool is created — and the pool is usually carved out of the pre-money, so it dilutes founders more than they expect. The ownership donut and dilution view here make the split explicit. SAFEs and convertible notes add a twist: they don’t set a price when signed, but convert at this round on the better of two terms for the holder — a valuation cap or a discount to the round price — so an early SAFE at a low cap can convert into a surprisingly large stake. Model the cap and discount to see the implied ownership before you sign. Educational tool only, not investment advice.