Startup Valuation Calculator

How can you determine the valuation of a startup?

Potential employees, investors, and startup peers often want to know the valuation of a startup. The art and science of valuing a startup is beyond the scope of this short blog here. However, if the startup recently raised funds, you can often find the amount they raised through Crunchbase, Pitchbook, or simple Google searches. If you know the total amount raised in the startup's most recent funding round, you can usually estimate the post-money valuation of the startup if you know common fundraising norms.

If you're in a hurry, just do this...

Fundable Startups offers the simple spreadsheet below to help you estimate a startup's valuation if you know the amount the startup raised in it's most recent funding round. Just enter the amount raised in the orange cell (follow the instructions in red text) and a middle-of-the-road valuation is calculated in blue text.

But for a more accurate valuation, do this...

But most people researching a startup's valuation want more certainty on the calculation. If that's the case, you need to estimate how much of the startup's equity was sold in that round. Seasoned startup veterans can use the following norms to refine an estimate of how much equity was sold in the round:

1. If the startup is reasonably healthy and fundable, start by assuming a middle-of-the-road estimate of 25% (see the yellowish Mid-Range Dilution column below the light gray row in the spreadsheet).
2. If the startup is raising a Series Seed or Series A round, it's reasonable to assume that they may sell as little as 20% or as much as 30% in the round. The valuation would be at the top or bottom of the Mid-Range Dilution column.
3. If the startup is not quite as fundable or if the priced round includes many convertible instruments (SAFEs and/or convertible notes) that will be converted in the round, then you should probably assume 30% to 40% of the startup's equity was sold in the round. This can be found in the light red High Dilution column in the center right of the spreadsheet.
4. If the startup is very successful with many investors fighting to get in the round -- or if the startup is raising a Series B or Series C -- then maybe 10% to 20% was sold. The valuation would be found in the light green Low Dilution column in the center left of the spreadsheet.
5. In some rare cases (such as extremely successful startups or very late rounds like a Series E and beyond), less than 10% of the equity may be sold. The valuation would be found in the dark green Very Low Dilution column on the far left of the spreadsheet.
6. If some specific cases such as drug development / life sciences companies, deep tech startups, and other very high risk ventures, 40% to 50% of the equity may be sold in the round. The valuation would be found in the dark red Very High Dilution column on the far right of the spreadsheet.

(If you're preparing to go on Shark Tank, the rapid-fire negotiation -- somewhat dramatized for a TV audience -- will require that you very quickly calculate in your head the numbers in the multi-colored dilution table.)

What is the value of my startup stock options?

Many job candidates and employees of startups want to know what their stock options might be worth. Many startup founders choose to keep their valuation confidential. However, if you recently received a job offer or you're a current employee, most startups will tell you the amount raised in their most recent funding round. Plug that number into the spreadsheet calculator above to get an estimate on the valuation. Then head over to our startup stock calculator and plug in your option grant to get a sense of what your options might be worth.

Fundability is key to a startup's valuation

The simple guidelines above suggest several assumptions to estimate a startup's valuation. Founders who want to drive their venture's valuation need to focus on the startup's fundability. Fundability is driven by great execution across multiple areas of your startup. Great execution is loosely defined (per Harvard Business Review) as making many correct decisions on a daily basis. Smart founders will invest in their own learning and will engage seasoned startup experts to help them execute excellently. We've built our training program and coaching offers to help founders do just that: execute very well.

Still want an expert opinion?

This basic spreadsheet offers a simple, quick and dirty way to estimate the startup's valuation if you know the amount raised in the last funding round and you have some veteran experience with startup fundraising. If you still want a quick opinion from an expert, you can book a live coaching session with me here.

I hope this tool helps you!

Sam