Later stage startups have revenue numbers, customer acquisition costs and marketing analyses that can all be plugged into magic financial formulae by VC whiz kids that pop out instant valuations.  Most of the time, establishing valuation ends up being a crap shoot. Market – How big is the market and revenue potential?  MORE >>

Your friends and family are really the only answer until you have a significant revenue stream. Use friends, family, and angels, if possible, to get a product, revenue, and customers first before the VC connection. To make this work, you will need an initial valuation of at least $5M. Overall, investors put $7.5 startups. MORE >>

All Entrepreneurs say their projections (from revenue, to expenses to exit values) are conservative.  Since an investor is focused on ROI, the implication to valuation now becomes clear.  All else being equal, the lower the valuation the higher the (potential) ROI.  By Bob Aholt. Now for some details.  In this case 4.55.  MORE >>

When entrepreneurs raise equity capital for startup companies, the investors’ percentage of ownership is determined by the negotiated valuation for the company at the time of investment.  For example, if the negotiated pre-money valuation is $1.5 the valuation of the company increases.  million ÷ ($1.5 million + $0.5 million)].  MORE >>

On the other hand, some trends are not so great: revenue per user growth is slowing. . Outstanding overview by the Lex column in the Financial Times  the other day. On the plus side, operating margins last year were astoundingly good, at 50 percent. Entrepreneurs MORE >>