Back to our startup valuation issue.
Recently I read a Mashable article about 7 questions you should ask yourself when you come up with valuation of your startup.
Honestly, this article was not fascinating but I picked up there question and I give you my answers :
1. Do you need to retain a lawyer?
Not so very good question. The right one is WHICH lawyer do you need. Actually there is no need to bring in the lawyer that helped your parents to divorce or who helped you dealing with your latest car accident. What you need is a funding and valuation coach. He will help you getting the right startup valuation on the spot but also deal with the consequences of what you will agree with with your fund providers.
2. How Much Investors Will Pay
Come on, give me a break! That answer you get on seriousfunding.com !
3. What Your Entire Business Lifecycle Looks Like
I do not understand this question.
Well, if I try hard it might be to ask yourself, How much money will I need to get my business to scale.
4. How Comparable Companies Are Valued
OOOps, wrong question again. Seriousfunding also uses many startup valuation DBs to deal with comparable valuations.
5. Whether or Not Itâ€™s Too Early to Raise
Oh thatâ€™s a good one. It is true that raising money takes time. Moreover, your valuation moves as your business move. We recommend to prepare for the best financing window. Start pitching, meeting, talking to potential sources of fund. Put all that in your database. Continue to informa them of how your company is doing. And when your are ready, then shoot !
6. The Startup Valuation Range Based on the Quality of Investor
Excellent question. Do not forget to value your investor. You may consider having a slightly lower startup valuation for someone who will help you grow your business than for someone who is only writing a check.
7. How Big Your Market Is
This is also a good one. I give you Mashable answer as I cant make better : â€œSeed-stage investors are most concerned with the market opportunity. How big can this company eventually be? As Fred Wilson says in his blogÂ avc.com, startup investing follows a â€œpower lawâ€ where a few companies drive almost all of the returns. These companies are worth billions because they dominate a large market. If you are in a small market, there is a cap on how big you can be, even if you execute perfectlyâ€.Â
Thatâ€™s all for today.
Stop reading this blog and go get some cash for your startup.