Ask HN: How do I estimate the value of my start-up?

4 points·iconfinder··6 comments

Before meeting with investors, I want to have an estimated price of my start-up.

What factors should I take into account?

If the business is already making money, valuation is often a multiple of annual revenue. Depending on the length of the investment and your business model, this might be anywhere between 3 and 10x revenue.

I'm sure there have been a few threads on this before. Here's one of them:

http://news.ycombinator.com/item?id=1785448

It is making some revenue already. Thank you for the link.

do a random function of values between $1 dollar to $100 million, and whatever the output is, that's the value of your startup.

There is no formula. Everything is intrinsic. You might think your startup is worth $10m right now, but investors might think otherwise. If you really want to know, go find 10 finance majors and tell them how much they think your company is worth, average it, and that's probably the best way. The biggest factor you should account for is how much people are willing to pay for it, especially investor.

There's no secret. If you're a smooth talker, you might make a $100k idea valued at $1m. If you're a bad talker, you might make an $1m idea worth 100k. If you can convince Yuri Milner, you can probably make your 100k idea $10m. I guess you can factor that into account as well. ;-D

zero. spend more time on your product than trying to rack your brain over made-up numbers.

unless you are sitting down with an old school investor / spreadsheet jockey, you're better off selling them on the potential of the startup.

how does one 'sell' potential?

i should stop myself because i'm not a big proponent of potential. i like progress. probably should have used that word instead.

fair to say you can gauge potential based on progress?

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