Mar 1, 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.
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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