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Startup Valuation

Asked by:
Community Member
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Jul 23, 2023
What valuation method would be most appropriate for a pre-revenue startup with a high potential and high-risk profile? 
1 answer
Accepted Answer
Jul 24, 2023
You're defining every early stage startup in the world here when you say "pre-revenue startup with a high potential and high-risk profile". Startup valuations are typically set by the market of investors and not by some methodology or spreadsheet. 
Hi, @Mike, I have a follow-up question to this: if there isn't a set methodology or "spreadsheet" that helps define startup valuation, how does either a startup founder or an investor know what a fair valuation is? And this may sound naïve, but how do we prevent the market of investors from bloating the valuations of certain startups? (Or, since I'm assuming that's already being done today, how do we prevent more of that from happening in the future?)
Community Member
Jul 30, 2023 2:57pm
@Mike, follow-up question: Who decides to select startups (ideas) to invest in? Is it a mutual decision? or a chain of approvals?
Community Member
Sep 26, 2023 8:19am
Valuations are set by the market. If there is a lot of investor demand, the valuation is higher and vice versa.
Sep 26, 2023 3:18pm
@Siddarth - I don't understand your question. The fund manager typically makes the investment decisions.
Sep 26, 2023 3:19pm
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