How much is your startup worth?
The conference room was full of energy. We were refining the pitch deck before a major presentation. The question came up, “How much do we ask for?”
How much you ask when pitching for venture capital is often somewhat predicated on what you think you can be valued for. In other words, how much is your “proposed solution + your progress” worth?
Knowing your valuation is a black art, of course–harder than guessing what your house would sell for in five years. But we can get a few tips from comparable valuations–and also look at the current trends in valuation.
Just add another couple million?
Recently the trend is that companies are earning higher valuations. The Wall Street Journal recently covered this,
“A new report from data provider Pitchbook Data says that the median pre-money valuation of Series A rounds globally in the first half of this year was nearly $12 million, a $2 million increase from last year’s median. Series B rounds, which often come when a company is driving its product to market, saw an even bigger jump. The median valuation rose 36% in the first half compared to 2013, to $35.2 million Even seed rounds were affected, with the median valuation growing to $5.9 million, a 23% increase from last year and far higher than the $3.2 median in 2010.”
Vetting startup valuation
- If valuations are rising, make sure you factor this in for your company as you go to pitch this season.
- A lot of times your funding gap–the money you are asking for to build your vision–reflects the equity you’re willing to liberate for the money. Make sure you’re on trend.
- Be careful of older comparables and update them to reflect “current” sensibilities.
- Always aim for a public pitch that you can tune in the private setting. Your public pitch is a “cattle call” to wow investors, not your final negotiation. That means, develop a deck with a “glass half full” optimism. As you negotiate with potential partners and investors, you can explore weaknesses and other scenarios as appropriate in each setting. Different investors bring different strengths (and weaknesses) to the table, so save the tailoring of your presentation for these later, private meetings.
Write2Market is among the Top 10 Agency for StartUps.
We help startup companies craft higher valuation messages and gain traction fast. Contact us for a meaningful conversation today–we’d love to hear from you.