Cookies Consent

This website use cookies to ensure you get the best experience on our website.

Learn more
main slider

Startup
Knowledge Base

Startup Valuation

What Is Startup Valuation?

 In simple terms, startup valuation is the process of quantifying the worth of a company, aka its valuation. During the funding rounds, an investor pours in funds in a startup in exchange for a part of the equity in the company. Therefore, valuation is important for entrepreneurs as it helps in determining the equity which they have to give to a investor in exchange of funds.

What will get a startup a good valuation? 

A high startup valuation is based on the startup being able to show or possess the following things:

 • Traction – One of the biggest factors of proving a valuation is to show that your company has customers. If you have 100,000 customers you have a good shot at        raising $1 million.

 • Reputation – If a startup owner has a track record of coming up with good ideas or running successful businesses, or the product, procedure or service already has    a good reputation a startup is more likely to get a higher valuation, even if there isn't traction.

 • Prototype – Any prototype that a business may have that displays the product/service will help 

• Revenues – More important to business-to-business startups rather than consumer startups but revenue streams like charging users will make a company easier to value.

 • Supply and Demand – If there are more business owners seeking money than investors willing to invest, this could affect your business valuation. This also includes a business owner's desperation to secure an investment, and an investors willingness to pay a premium .

• Distribution Channel – Where a startup sells its product is important if you get a good distribution channel the value of a startup will be more likely to be higher.

WORKING ON A STARTUP IDEA?

get in touch