Valuation for Pre-Seed Start-ups
I have a case study in which I need to value a start up pre-seed for VC. How would you all approach this? I have no data on revenues/customers/pricing etc. Thank you in advance!
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I hate to be that guy. But I think that’s the point of the exercise.
With that being said look at what data is available. Number of employees, what are comps, does the website have any stats on it
Start at $5m valuation.
If Ivy, Stanford, or MIT grad, multiply by 2.
If second-time founder, multiply by 2.
If web3, multiply by 10.
This is actually accurate. Just increase Stanford/MIT multiplier to 3x or 4x.
If it's preseed- then revenues (if any) are less than $5mm. You want to look at customers, how fast they are growing, CAC, LTV of customers, total market.
Super helpful. Now what percent share would you allocate to this startup? Looking at comps that are maybe 5 years ahead and discounting their customer base and revenues?
I would look for comps but the challenge is pre-seed doesn't really have a lot to make a comparable to. Do you have any hard data? Anything at all? Or are they just asking what your thought process would be and what you would want to know? With what you've told so far a valuation cannot be made.
No data whatsoever, no access to Pitchbook/Crunchbase.
Just simply have to give a valuation and my reasoning behind it. Thank you!
Ok- on this case then I'd look up recent comps and market size of seed round/series A to get a pre-post money valuation. Stick with seed round valuations for comparison. Here is a listing of seed round deals from the last year: https://www.crunchbase.com/hub/seed-stage-companies-founded-in-the-last….
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