The short answer
The value of a startup cannot be calculated exactly, only derived. Three methods are common: the VC method (worked backwards from the expected exit value), the revenue multiple (revenue times a factor from comparable deals) and the Berkus method (points for idea, team, product, market). It is best to use at least two methods and check whether the results fit together.
Method 1: VC method
Investors ask: what must the stake be worth in a few years to justify the risk? You work backwards from the expected sale value.
- Estimate the company value at exit (exit value).
- Set a target return (multiple of the money invested).
- Calculate today's post-money value: exit value divided by target return.
- Pre-money value: post-money minus the investment amount.
Worked example (freely chosen numbers): You expect a sale for EUR 50 million. The investor wants ten times their money back. The post-money value is then EUR 50 million divided by 10, so EUR 5 million. If the investor puts in EUR 1 million, the pre-money value is EUR 4 million and the investor holds 20 percent. Later funding rounds dilute that share, so include this in your calculation.
Method 2: Revenue multiple
Here you multiply (annual recurring) revenue by a factor achieved in comparable financings or sales in your industry. The formula: company value equals revenue times multiple. The factor depends heavily on growth, margin and market conditions. A reliable number only comes from current, comparable deals, not from rules of thumb.
Method 3: Berkus method
For startups without meaningful revenue, you assign a value contribution per area: idea, prototype or product, team, strategic relationships and first sales. The sum gives a rough starting value. The method is simple but subjective. It suits a first assessment, not negotiations over the last euro.
Which method fits when
| Stage | Suitable method |
|---|---|
| Before first revenue | Berkus method, possibly compared with similar seed rounds |
| First revenue, recurring income | Revenue multiple, complemented by the VC method |
| Growth stage with planning | VC method and scenarios based on a financial model |
Common mistakes
- Overly optimistic exit value: the higher it is set, the less credible the calculation looks to investors.
- Only one method: only a comparison shows whether the numbers are plausible.
- Forgetting dilution: later rounds shrink your share.
- Confusing valuation with a wish price: in the end, what counts is what an investor is willing to pay.
How to prepare
Carefully derived numbers, a traceable plan and clean assumptions make the negotiation easier. How we support founders is described on our fundraising page.
Frequently asked questions
How do I calculate the value of my startup?
You derive it with one or more methods, for example the VC method, revenue multiple or Berkus method, and compare the results.
What is the difference between pre-money and post-money?
Pre-money is the value before the investment, post-money the value after. Post-money equals pre-money plus the investment amount.
Is there an online calculator for startup valuation?
There are calculators that implement one of the methods. They are only as good as the assumptions entered. Use them as a cross-check, not as the sole basis.
What share do investors typically ask for?
That depends on the valuation and the investment amount. The share equals the investment amount divided by the post-money value.
