Berkus Method for Startups

Valuing a startup with no revenue can feel like navigating in the dark—but not with the Berkus Method. It’s one of the most practical, founder-friendly, and widely adopted early-stage valuation tools used by angel investors and venture capitalists worldwide.
What Is the Berkus Method?
Originally proposed by renowned investor Dave Berkus, this method gives a quick and structured way to estimate a startup’s pre-money valuation based on five key risk-reduction factors. Instead of relying on revenue projections or complex financial modeling, the Berkus Method breaks valuation into qualitative components—making it especially useful for idea-stage or pre-revenue startups.

It’s simple, logical, and fast.

The Five Key Factors
Each of the five components is scored between 0 and 100%, reflecting how much progress or value has been achieved. Each component contributes equally to the valuation, and the maximum valuation is defined by a top limit (typically in the range of $1M–$5M, but adjustable).

1. Idea Soundness Score [%]

How compelling and scalable is the core idea?
0% = weak or unclear idea
100% = transformative solution with high market potential

2. Team Quality Score [%]

How capable is the founding team?
0% = inexperienced or unbalanced
100% = world-class, diverse, with technical and business excellence

3. Prototype Development Score [%]

How developed is the product or prototype?
0% = only on paper
100% = fully built, tested, and deployable

4. Strategic Relations Score [%]

Are there partnerships, customers, or traction?
0% = no connections
100% = signed distribution deals or strategic alliances

5. Marketing and Sales Score [%]

Are there sales or validated marketing strategies?
0% = no go-to-market plan
100% = product launched and generating revenue

Each of these components is weighted equally, and the final valuation is calculated by multiplying the average percentage score by the Top Limit ($M) that you define.