The venture capital method, the scorecard and Berkus methods, risk-factor summation, revenue multiples for early companies, and what each one quietly assumes.
Pricing a company with little or no revenue
Lessons
The VC method works backwards from the exit — The venture capital method starts from a plausible exit value, divides by the return an investor needs, and adjusts for future dilution to reach what the company can be worth today. (11 min)
The Berkus method prices progress that reduces risk — The Berkus method assigns a value to each of five risk-reducing milestones a pre-revenue company has reached, with a fixed maximum for each, and adds them up. (9 min)
Risk factor summation adjusts a price for twelve named risks — The risk factor summation method starts from a benchmark valuation and moves it up or down in fixed steps for each of twelve categories of risk, making every adjustment explicit. (10 min)
A revenue multiple for a young company needs three adjustments — Once a startup has revenue, it is often valued as a multiple of it. Borrowing public or late-stage multiples requires adjusting for growth, size and illiquidity before the number means anything. (11 min)
Several methods give a range; the gaps show what you believe — No single method values an early company reliably. Running several and comparing the results shows the range of defensible prices and exposes which assumptions drive the difference. (10 min)