I am currently helping a team calculate the pre-money valuation of their company before they go out and raise additional equity funds. This is not an easy exercise to do on your own company. However, it made me go back to one of my favourite references, an article called, “Valuation For Startups  – 9 Methods Explained”, co-written and published in French by Augustin de Cambourg and in Portuguese by Raphael Mielle. Link below in English.

 

The article does a great job of explaining all of the methods that can be used. They can be used to estimate the value now and to estimate the value once a key milestone or inflection point is reached. In fact, you can map out the whole journey you plan to take and value the company at each key milestone or inflection point.

 

At the end of the article, Augustine and Raphael pinpoint what they see as the best valuation method: “Having said that, I find that the best valuation method is the one described by Pierre Entremont, early-stage investor at Otium Capital, in this excellent article. According to him, you should start from defining your needs and then negotiate dilution: The optimal amount raised is the maximal amount which, in a given period, allows the last dollar raised to be more useful to the company than it is harmful to the entrepreneur.”

 

Here is the article on valuation…

https://startupsventurecapital.com/valuation-for-startups-9-methods-explained-53771c86590e