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Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

  In a bottom up approach, the forecast is built from actual user projections. An average of these ranges results in a pre-money valuation of about $4MM.   If similarly situated companies are seeing $3.5MM pre-money valuations, this might become the target valuation.

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Channel your Inner VC to Understand Startup Valuations

www.currentlyobsessed.com

Instead of “We are worth about $5m because we have done XYZ and we need to raise $1m, so let’s sell 20%&# it’s better to think about valuation as an output variable, like “Let’s raise $2mm and sell 33%, our (pre-money) valuation is therefore $4mm.&# Future value is key.