The Valuation Matrix For Startups - Runway, Price, and Dilution Risk Trade-Offs in Pre-Seed Valuations

Good morning…

I wanted to share an excellent and detailed look at how founders and seed investors should be thinking about ‘valuations’ for their startup companies.

The post was written by Scott Hartley of Everywhere Ventures (Social Leverage is an LP in their most recent fund). I have had Scott’s partner Jenny on my ‘Panic With Friends’ podcast as well.

Here is the post.

The one sentence I believe is MOST IMPORTANT in Scott’s piece is:

On the cash raised, aka your runway, you need to be able to 2-3x your post money valuation on the next round.

Over the last 5-6 plus years, this data point has been lost on my industry.

It has not been lost on me, so I have been slow to deploy capital (invest in startups) and some would say cranky.

I am not the market, so all I have to offer are my instincts, experience and opinions so please do read Scott’s post.

Here is the illustrative, not prescriptive valuation matrix that Scott created:

Have a great Friday.