We utilized original materials from an excellent article written by venerable Angel Investor, Bill Payne. A link to his website has been provided at the end. We added controls to automate the calculation, and added our own Pre-Money Valuation Method. Try each one, average the results and use it to set Pre-Money Value in HOME.
Data from Pre-Money Valuation Methods will be saved with a HOME Scenario. You can keep the same Pre-Money Data or change the data for each Home Scenario you make. Valuation Data will be sent with the XLS file to your login-email.
Creates talking points for Pre-Money Value negotiations
(Click on headings to list intangibles)
|Shark Cap Table Founder Valuation||$0|
|Venture Capital Method||$0|
|Dave Berkus Method||$0|
|Risk Factor Summation Method||$0|
|Bill Payne or Score Card Method|
|1-- Average of 1 Methodology||$0|
|2-- Average Angel Pre-Money Valuation|
|3-- Average of Averages||$0|
Determines Allowable Pre-Money Value to Reach Goals
Post-money Valuation = Exit Value ÷ Target Investment Multiple
Pre-money Valuation = Post-money Valuation – Investment
Suggested total is $2.5 million at $500,000 each, but could be more.
Positive Risk Factor is LESS RISK & Higher Pre-Money Valuation.
+2 -- very positive for company growth and a great exit
+1 -- positive
0 -- neutral (factor does not impact valuation)
-1 -- negative for company growth and a wonderful exit
-2 -- very negative
Pop-up HELP is the opinion of Bruce Badeau
|1 -- Management||1|
|2 -- Stage of the business||1|
|3 -- Legislation/Political risk||1|
|4 -- Manufacturing risk||1|
|5 -- Sales and marketing risk||1|
|6 -- Funding/capital raising risk||1|
|7 -- Competition risk||1|
|8 -- Technology risk||1|
|9 -- Litigation risk||1|
|10 -- Reputation risk||1|
|11 -- Potential lucrative exit||1|
|SUM of Risk Factors
(negative is higher risk)
|Multiply Risk Factors Typically by $250,000|
Risk Factor Pre-Money Valuation
This is a more subjective and complex method that needs local historical pre-money valuation data. We strongly suggest reading venerable Angle Investor, Bill Payne's white paper about this methodology. His website is a treasure trove of exceedingly useful information about Angel Investing and Start-ups, and we made extensive use of his article on Pre-Money Valuation Methodologies.