Valuation is a key factor in a startup’s fundraising.

Most startups show an aspirational valuation and then spend the pitch trying to convince investors it’s appropriate.

Most use their forecasted revenues to justify their valuation.

Forecasts hold little value to the investor and often leave them unconvinced about the proposed valuation.

Instead of using revenue, articulate the values already in the business.

Highlight the intellectual property and its value by showing comparables with other companies.

Show recent exits in which the IP was a central part of the valuation.

Show the other assets in the business, such as the team and their track record.

Call out the customers that you have already won.

Show the product and what has been built so far, and highlight the revenue generation underway.

In raising funding, show that your valuation has already been achieved.

Make the case by showing specific values already in the business that add up to the proposed valuation.

Futures hold little value to the investor. 

Focus on what’s in the business today.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.