Fundraising & Investors

How do I actually value a pre-revenue startup, and where does the seed number come from?

A starting point

At pre-revenue seed, valuation is not a spreadsheet output, it is a negotiation anchored by how much you raise and how much dilution you accept (usually 15 to 20 percent). Work backwards: decide the round size, target roughly 15 to 20 percent dilution, and that implies your post-money. Comparable rounds, investor demand, and your traction move the number, not a DCF. In India, don't over-anchor to US valuations, local seed rounds price lower and that is fine.

Go deeper

Hand-picked from around the web, each with a note on why it earns your time.

3 resources 3 link-checked

Read

📄 Article
✓ Link checked Free Beginner

Why we picked it YC's answer to what you need before a seed round is not a revenue number, it is a rate: raise once your product is being adopted at an interestingly rapid rate, with 10 percent per week for several weeks cited as impressive. That reframes the whole question for an Indian founder sitting on modest absolute numbers: a small base growing fast beats a large-looking base that is flat. Use it as the counterweight to the Blume floor.

A Guide to Seed Fundraising

From Y Combinator by Geoff Ralston 20 min read

  • The readiness test is a growth rate, not a milestone: a product being adopted at an interestingly rapid rate, with 10 percent week over week for several weeks called impressive.
  • Raise when you have figured out the market and built something people are adopting fast, not before you have that signal and not after you have already stalled.
  • Minimize time in fundraising mode: a tight, fast-growth story lets you raise quickly and get back to building instead of dragging a weak deck around for months.
Open ycombinator.com →
📄 Article
✓ Link checked India Free Beginner

Why we picked it This is the India reality check that stops you anchoring to US numbers. It puts the median Indian seed ticket at roughly $1M (flat), against a US seed median many multiples higher, and shows early-stage as the smallest slice of the pie ($406 Mn) while late and growth stages soak up the capital. That is the concrete evidence that pricing your local seed lower than a US comp is normal, not a failure.

Indian Startup Funding Jumps 8% YoY To $5.7 Bn In H1 2025

From Inc42 by Inc42 Staff 8 min read

  • The median Indian seed ticket sits around $1M, so an Indian seed round is priced well below a US seed and that is fine
  • Early-stage funding is the thinnest slice ($406 Mn in H1 2025) while late and growth stages dominate, so seed capital is genuinely scarcer here
  • Deal volume matters more than headline totals: a few $100M+ mega deals inflate the aggregate, so read stage-wise figures, not the top-line number, when benchmarking your round
Open inc42.com →
✍️ Essay
✓ Link checked Free Intermediate

Why we picked it When a term sheet lands and you are tempted to fight over the last point of valuation, this is the essay that reframes the decision. Graham reduces the whole dilution question to one line: give up n percent only if it makes the remaining (100 - n) percent worth more than the whole company was before, formalized as the 1/(1-n) break-even multiple (take 7 percent, the deal has to lift value by more than 7.5 percent to pay off). It teaches you to judge an offer on your average outcome, not on a valuation you can brag about.

The Equity Equation

From paulgraham.com by Paul Graham 12 min read

  • Accept dilution only when the money improves your average outcome enough that the smaller slice you keep is worth more than the whole company was before
  • The break-even test is 1/(1-n): give up 7 percent and the raise must increase company value by more than 7.5 percent to be worth it
  • Valuation is not the thing to optimize: optimize the size of your slice of the eventual pie, which means picking money and terms that actually grow the company
Open paulgraham.com →

People also ask

How does seed fundraising actually work, step by step? You build enough proof (traction, team, or a compelling wedge) to make investors believe, then run a tight, time-boxed process where you talk to ma... Beginner 3 resources → How much money should I raise at seed, and how much equity do I give up? Raise enough to hit a meaningful milestone with buffer, typically 18-24 months of runway, and plan to sell roughly 10-20% of the company at seed. D... Intermediate 3 resources → How do I find and get intros to angel investors and seed funds? Warm intros beat cold outreach massively, so map your network and get founders in each investor's portfolio to introduce you. Build a target list r... Intermediate 3 resources → How do I create momentum and FOMO so investors commit instead of stalling? Run the whole process in parallel and time-boxed so investors feel a real deadline and real competition, because a 'maybe' is almost always a polit... Advanced 3 resources → How is raising a seed round in India different from the US? The instruments and paperwork differ: India commonly uses the iSAFE (a CCPS-based cousin of the US SAFE) and CCPS-heavy term sheets to fit Indian c... Intermediate 3 resources → What does an early-stage VC actually look for before writing a cheque? At seed it's mostly team, market, and evidence you can move fast and learn faster, because there's rarely enough traction to lean on numbers alone.... Intermediate 3 resources →