How do you value a company pre-revenue?

Using the Risk Factor Summation Method, the pre-revenue startup valuation will increase by $250,000 for every +1, or by $500,000 for every +2. Conversely, the pre-revenue valuation falls by $250,000 for every -1, and by $500,000 for every -2.

How do you value a user base?

Number of Users x (User Lifetime Value [LTV] – Customer Acquisition Cost [CAC])

1. User LTV = (Avg. Value of a Sale) x (Avg. Number of Repeat Transactions) x (Avg.
2. CAC = (Total Marketing Spend for Set period) / (Number of Users Acquired in that Period)
3. Valuation = Number of Your App’s Users x (User LTV – CAC.

What is considered pre-revenue?

Early stage valuations may also coincide with the company being pre-revenue, meaning it has yet to generate any sales. This may be because it doesn’t have a product on the market yet. Investors can still determine the company’s value, basing it on a variety of other factors.

How much is a Google user worth?

#1 Google’s each user is worth $182 The web giant, Google has a market cap of $364 billion and 2 billion active users. But Google generates 90\% of their revenue from advertising.

How do angels value early stage companies?

There are several ways to value startups, but the most popular method used by angels to determine a pre-money valuation is the Scorecard Method. The Scorecard Method is used for comparing target companies to similar startups, such as business sector, stage of development and geographic location.

How do you justify a pre-money valuation?

You can also justify your valuation by using the earnings multiple approach. It’s quite simple. All you need to do is to multiply your total earnings without including any deductions such as tax and depreciation by some multiple.

How is pre-money valuation calculated?

The Pre-money valuation is equal to the Post-money valuation minus the investment amount – in this case, $80 million ( $100 million – $20 million). The initial shareholders further dilute their ownership to 100/150 = 66.67\%.

How do I value my company?

There are a number of ways to determine the market value of your business.

1. Tally the value of assets. Add up the value of everything the business owns, including all equipment and inventory.
2. Base it on revenue.
3. Use earnings multiples.
4. Do a discounted cash-flow analysis.
5. Go beyond financial formulas.

How much does Google make per user per month?

During the most recently measured period, the online company’s ARPU amounted to 6.7 U.S. dollars, up from 5.9 U.S. dollar per monthly active user in the previous quarter….

How do you value a pre-revenue company?

Like the Scorecard Method, it starts with the average pre-money valuation of pre-revenue companies in the region and business sector of the target company. Once the average value of pre-revenue and pre-money start-ups has been determined, it is then adjusted for 12 standard risk factors.

How much is a pre-money company worth post-money?

This would value the company at $2.1m post-money ($42m/ 20). If the founder and investor agreed on an investment of $500,000, this result in a pre-money valuation of $1.6 ($2.1m less $500k). Note: the above example does not include any allowance for dilution.

How to value a startup company with no revenue?

Traction is Proof of Concept. If you’re wondering how to value a startup company with no revenue, one of the main indicators is traction. You can get the true story of the business by looking at the following: Number of Users – Proving you already have customers is essential. The more, the better.

Do free customers really matter?

Although executives know that free customers matter, they tend to underestimate their significance for two reasons: First, managers naturally focus more on customers who generate the bulk of revenues, and second, they lack a rigorous method for calculating the lifetime value of free customers.