Mon, 1 March 2021
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In raising funding you’ll need to propose a value for the equity in your startup called valuation. One way to set a valuation is to use the 5X your raise method. Here’s how it works. Most investors want to see the valuation for their money coming in at 20%-25% of the post-money valuation. This gives a 4X-5X valuation based on the investment. For example, using 4X raising $500K, a $500K investment plus $1.5M pre-money, yields a $2M post-money valuation. In another example using 5X raising $500K, a $500K investment plus $2M pre-money, yields a $2.5M post-money valuation. Using this method, your pre-money ranges from $1.5M-$2M. This gives you a ballpark estimate for setting the valuation of your raise. For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Feedback please contact info@tencapital.group Music courtesy of Bensound. |