Valuation Basics Every Early Founder Should Know

Early valuation is not a calculation

Before meaningful revenue, valuation reflects team, traction, market and how much competition there is for your round.

Pre-money and post-money

Pre-money is the value before new investment. Post-money adds the new money. Investor ownership equals the investment divided by the post-money value.

Think in dilution

Instead of maximising valuation, decide how much ownership you can give up while raising enough to reach your next milestone.

Avoid overpricing

A very high early valuation can make the next round harder if progress does not keep up.

Compare carefully

Valuations vary by country, sector and market conditions. Talk to founders who raised recently in your space.

Get advice

Have an experienced advisor or lawyer review term sheets before you sign.

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