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