How do I get a $3m valuation?

You valued your startup at $1.9m:

3m-1

You think you’re worth $3m.

OK.

We have an app for that.

Plug in what you think your worth and you get:

3m-2

This means that for a $3m valuation you either need a plausible argument for the investor for a $1.6m instead of a $1.0m EBITDA:

3m-3

Or you need a plausible argument for a 7.8 instead of 5.0 EBITDA multiple:

3m-4

Or 1 instead of 3 milestones between seed and exit:

3m-5

Or a probability of success per milestones of 93% instead of 80%.

Or an IRR of -5,1% instead of 10,0% (not very likely).

Or an exit after -1,7 instead of 3 years (not very likely either).

Or you play around until you feel you have a plausible combination of assumptions:

3m-6

That’s how you get a $3m valuation.

 

Thanks to Hans Westerhof and Chretien Herben.

Joachim Blazer is founder at Venture Value. Contact him at joachim@venturevalue.com.

Venture Value does startup valuations for founders who want to raise money with an investor.