How to judge the accuracy of a valuation?

tpr Train Asked on September 7, 2015 in Deal Terms.
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Valuing startups at an early stage is definitely an art and we recommend leaving that to more experienced investors, at least until you have a sizeable number of investments under your belt and feel comfortable doing it.

There are many theories about how to calculate the valuation of early-stage startups, and one framework that is reasonably easy to apply is the scoreboard method, designed by Bill Payne, which takes the median startup valuation of the target’s specific region and vertical, then benchmarks that particular startup against seven characteristics, all weighted differently.

Don’t forget that valuations, regardless of the method, are ultimately solidified when both the lead investor and entrepreneur agree on a specific valuation, which makes it, at some level, a subjective calculation.

acr30 Expert Answered on September 7, 2015.
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