Article · 12 min read

How early-stage startups are valued by seed and Series A investors

Mercury Free Intermediate

Once you accept that the market sets the price, this piece shows you the actual methods investors reach for when there is no revenue to anchor on: comparables from recent deals, the scorecard method, the VC method working back from a target exit, and Berkus. Knowing the frameworks on the other side of the table lets you run a tighter process and read whether a term sheet is priced off real comps or a founder's optimism.

  • With no revenue, investors lean on comparables and scorecards weighted by team, market size, and traction, not a DCF
  • The VC method reverse-engineers your price from the fund's required multiple, which is why a 5M dollar entry needs a plausible 100x story
  • Valuation here is openly 'as much art as science', so multiple credible bidders move the number more than any single method
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The question it answers

  1. How do I value my pre-revenue startup, and who actually sets the price?

Read with it

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