Startup Funding Espresso – Negotiating Valuation With an Investor

Negotiating Valuation With an Investor

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The valuation is a negotiation, not a formula.

Startup founders negotiating valuation should consider the following points:

Know the current market rate for valuations for your stage and type of business.

Investors will see many deals like yours and will know the current rate.

Consider how to position your startup so it achieves the highest valuation.

Run the valuation through several different formulas to see which one provides the best result.

This is where you want to start your valuation discussion.

It helps to show how the assets of the business meet or exceed the proposed valuation.

This shows the investor that there’s no speculation it.

Find comps that show the valuation of other businesses at a fundraise or exit.

This helps prove the case that your business is worth what you say it is.

Articulate all the values in the business.

This is the most important part of the negotiation process.

Highlight the team, the intellectual property, the revenue, and the product at the very least.

Show the value of each for today and not tomorrow.

Today’s valuation is for today’s fundraise.

Tomorrow’s valuation is for tomorrow’s fundraise.

Investors are not interested in forecasts, but rather in what you have today.

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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