"The Entrepreneur's Help Page, from tannedfeet.com, offers sound advice for those looking to start up a new business. "--- Scout Report for Business & EconomicsValuing Start Ups
People estimate that there are 3,000 to 4,000 start ups in Chicago alone each year.
Your business is worth what anyone will pay for it. Typically, at the good business plan with "two guys and a garage" usually has a pre-money valuation of $1M to $2M. Any added value needs to be built from here typically in terms of excellent management, the market and the progress on your solution.
Remember every investor will want a step up in their investment during each subsequent round. If you price it too high to begin with, then it will be difficult to attract future professional investment. It is important to understand how each investor will perceive their risk and reward ratio. AS ELEMENTS OF RISK ARE ELIMINATED, THE VALUE OF THE BUSINESS GOES UP.
The first money you raise will be your most expensive. You need to use this money wisely to eliminate elements of risk in the business.
The Industry Standard publishes some additional metrics.
Final Thoughts: Remember it's still the Golden Rule "He who has the gold, rules"!
Forget the Valuation- Get the Money. If you are successful, the money will matter more than if the valuation was $1M or $3M.