Questions

How do I calculate value to a new startup to share with potential investors?

I have a service app ready for promotion and marketing.

5answers

Hi:
Congrats on getting your service app to this point.
Fundraising takes a lot of energy and time--more time than you think it will.
Instead of embarking on that journey right now, consider channeling your time and energy into generating sales: Bootstrapping the promotions and marketing to start getting paying customers in the door.
Not only will that generate the revenues that you'll ultimately be showing potential investors, but you will gain invaluable insights into your app--what works, what doesn't and what you need to tweak/modify to fulfill marketplace demand.
If you wish to discuss, send me a PM through Clarity for 15 free minutes.
Cheers,
Kerby


Answered 6 years ago

Im experienced at developing presentations communicating startup projects to potential investors. Do you expect your customers to pay monthly? I would suggest developing a chart displaying different rows showing if x amount customers purchase your application this is how much net profit the company will generate per month. Showcasing one column # of users & a second column net profit would be a great start. Showcase your projections for the next three years using the same flow. Factor in ALL of your expenses to display net profit including hosting, fees, maintenance etc. Outline inside your presentation the percentage(%) you are giving potential investors. Communicate their Return on Investment and at what point they would break even(Break Even Analysis) . If you have any questions I will be happy to answer them on a call.


Answered 6 years ago

Well... The effect way...

Start making sales.

If you have a great App, there are many ways to make initial sales.

Once you have a few sales, you'll also have feedback on your App code.

Guideline: The more sales you're making, the better deal you can get with investors.

Also, during your initial sales phase you may find a marketing approach which works so well, you no longer require any investor capital.


Answered 6 years ago

There are a number of tools available for pre-revenue valuation which are commonly used in Silicon Valley and other startup hubs. These can help you calculate a close estimated value without needing any financial inputs, since typically you would not have any real financial data available for a newly-launched startup. Some of these methods include Risk Summation, Scorecard, and the Berkus methods. There are some automated tools available online to calculate valuation based on these methods, such as at eleva8or.com and other platforms.


Answered 6 years ago

if you are looking for coming to a valuation in order to raise an angel round to get started with your GTM strategy, I would recommend you work on a deck that has product/service market fit, and has a clear outline of your total addressable market (TAM) - I also like to refer to it as 'achievable' market from a founder perspective. List out your product/service USPs and how it stacks up against the market incumbents - define your value proposition and have a simple projection in how much business you aim to drive over the next few (4-6) quarters. if you have already started active sales, Substantiate this with the results you've achieved and put up a projection. Once you have this, talk to other entrepreneurs in your network to validate and then apply standard industry math to see where you are at.


Answered 6 years ago

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