Startup company valuation calculator

Use our startup company valuation calculator* to estimate your company’s value and help inform your financial planning, strategic decisions, and investor discussions.

*Please note this calculator is best suited for SaaS startups.

Startup valuation calculator

Startup valuation calculator

This calculator is using the comparable company valuation method

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How do you calculate a startup company valuation?

There are many different ways to calculate a startup company valuation, with the most suitable methods depending on factors like your business’s stage of development, industry, and access to concrete data.

For example, some of the most popular startup valuation methods include:

  • Berkus method: This involves assigning a monetary value to specific aspects of your business, such as the concept, technology, and quality of the team, in order to back into a valuation.
  • Comparable company analysis: This startup valuation method uses multiples from comparable startups in your industry to estimate your company’s value. Common multiples include enterprise value (EV) to annual revenue, EV to gross profit, and EV to EBITDA.
  • Discounted cash flow (DCF) method: The DCF method involves projecting your startup’s free cash flows and discounting the future earnings back to present value based on an estimated rate of return on investment.
  • Risk factor summation method: This approach involves establishing a baseline valuation using comparable companies, then adding to and subtracting from it based on certain risk factors.
  • Scorecard method: This method also sets a baseline valuation for your startup using a comparable company, then adjusts it based on ratings of factors like the leadership, sales, and product, similar to the Berkus method.
  • Venture capital method: This estimates your startup's value based on a forecasted exit valuation and rate of return, typically based on your projected future earnings and a venture capitalist's desired return.

Early-stage startups often have to rely on qualitative strategies, like the Berkus method, but more established startups have enough historical data that they can use a variety of more quantitative approaches.

Either way, it’s typically beneficial to combine multiple calculation methods to increase your chances of creating a realistic valuation.

Startup company valuation example

To demonstrate how this works in practice, let’s calculate the valuation of a hypothetical startup seeking a Series A round using the comparables method.

Say you own a SaaS startup that generates $2M in annual recurring revenue (ARR) and $500K in EBITDA per year. You want to calculate its valuation using two multiples: EV to revenue and EV to EBITDA.

You identify four other SaaS startups in your industry with a similar business model, location, size, and growth rate, then calculate each valuation multiple for them. Here’s what you get:


Comparable Business

EV to Revenue Multiple

EV to EBITDA Multiple

Comp A

6.5x EV/Revenue

18.1x EV/EBITDA

Comp B

7.2x EV/Revenue

17.5x EV/EBITDA

Comp C

4.8x EV/Revenue 13.7x EV/EBITDA
Comp D

5.9x EV/Revenue

16.8x EV/EBITDA

Average

6.1x EV/Revenue

16.5x EV/EBITDA

To calculate your company’s valuation, you’d multiply your $2M revenue by the 6.1x EV/Revenue multiple and your $500K EBITDA by the 16.5x EV/EBITDA multiple to arrive at a valuation range of $8.25M to $12.2M.

Pre-money vs. post-money valuation

Pre-money valuation refers to the value of a company before it receives an outside investment, while a post-money valuation includes the most recent funding round.

When negotiating with potential investors, it’s essential that you understand which type of valuation is being discussed at any given point, as the distinction can have a significant impact on the ownership split between parties.

For example, say you and your potential investors agree that your startup has a valuation of $2M based on discounted cash flow calculations, and they offer to contribute $500K for a stake in the company.

If the $2M valuation is pre-money, the investor share would be $500K out of $2.5M, which is 20%. Meanwhile, your share would be $2M out of $2.5M, which is 80%.

However, if the $2M valuation is post-money, then the investor share would be $500K of $2M, which is 25%, and your share would be just $1.5M out of $2M, which is 75%.

That may only be a 5% difference, but that can represent significant amounts of money at your eventual exit. For example, if your company eventually sells for $20M, that 5% represents $1M in proceeds.

Factors that affect valuation multiples

While business valuation multiples are frequently derived by analyzing similar companies, that’s not always the case. They can also be based on generally accepted benchmarks within a given industry.

Industry norms for valuation multiples are primarily determined by the typical characteristics of businesses in that sector, such as their typical growth rate, scalability, and capital requirements.

For example, SaaS startups often command higher valuation multiples, largely due to their subscription-based model, which tends to create predictable, recurring revenue streams and significant scalability.

Historically, SaaS companies have also demonstrated fast growth rates, and the cost of acquiring new customers is relatively low once the platform is established. As a result, venture capital investors are often willing to pay a premium for them.

In contrast, manufacturing startups tend to see lower valuation multiples. Not only are their revenue streams less predictable, but they also require a high upfront investment amount for equipment, facilities, and inventory, culminating in slower growth rates.

Get expert help with startup company valuations

Startup company valuations can be surprisingly complex, especially for founders who lack a financial background. It’s easy to get overwhelmed when you’re navigating complex financial metrics, growth projections, and industry trends.

However, calculating an accurate valuation isn’t something you can afford to mess up. Not only is it an essential part of securing equity and debt financing for startups, but it also has a direct impact on your ownership percentage and financial future.

Instead of trying to navigate the process of calculating your startup company valuation on your own, it’s highly beneficial to enlist the services of a financial professional, like one of Zeni’s fractional CFOs, who specialize in financial management for startups.

You’ll get access to expert financial guidance for a fraction of the cost of a full-time hire, which is especially high for a CFO, who would likely expect a competitive salary, excellent benefits, and startup employee equity.

In addition to helping you calculate your valuation, they can offer strategic advice on how to defend it in negotiations and factor it into your long-term plans.

Schedule a free consultation with Zeni today and get the help you need to streamline your valuation calculations and secure your next fundraising round.