How to Do a Startup Valuation Using 3 Different Methods

Valuing a startup isn’t about guessing a number, it’s about translating potential into measurable signals investors can trust. The challenge is that early-stage startups often don’t have years of revenue data or assets to lean on, making traditional corporate valuation models less reliable. Instead, founders need to use practical frameworks that reveal both their business’s promise and its current standing.

Let’s walk through three common valuation methods every founder should understand before raising capital.

1. Comparable Company Method

Also called “market multiples,” this method compares your startup to similar companies that have already raised funding or exited. The logic is simple: if startups in your sector and stage are valued at certain multiples of revenue, users, or ARR, yours might fall within that range too.

For example, if SaaS startups at your stage are typically valued at 5–7x ARR and you generate $200K annually, your estimated valuation could range between $1M and $1.4M.

The advantage of this method is that it’s grounded in reality, real investor behavior and market data. The downside is finding truly comparable startups with transparent metrics. This is where data-driven tools like SeedScope help by benchmarking your company against over a million global startups, making “comparable” actually comparable.

2. Scorecard Method

The scorecard method is ideal for pre-revenue startups. It evaluates your company against others that have raised capital in your region and sector by scoring qualitative factors such as:

• Team experience

• Market size and competition

• Product readiness

• Customer traction or engagement

• Funding environment

Each factor is weighted and compared to an average benchmark. For instance, if your team and market are above average but product readiness lags behind, your score adjusts accordingly. The final weighted score is then applied to a typical valuation range for your sector.

Tools like SeedScope automate this process by quantifying qualitative elements—translating investor logic into objective scores—so founders can see how each factor contributes to their valuation.

3. Risk Factor Summation Method

This method starts with a baseline pre-money valuation (say, $2M) and adjusts it up or down depending on a set of risk categories—product, technology, competition, legal, funding, scalability, and so on.

Each category is given a score, and the sum of positive or negative adjustments refines the final valuation. A startup with high scalability and strong team execution might gain $500K, while a lack of defensibility could reduce it by $300K.

This model forces founders to confront the reality of their risks instead of only focusing on upside potential. It’s one of the reasons SeedScope incorporates both risk and performance metrics in its valuation engine, providing a clearer picture of what drives or drags a startup’s worth.

Why Combining Methods Matters

Each of these methods offers a different lens: one market-based, one qualitative, and one risk-adjusted. The smartest founders don’t rely on a single number—they triangulate. They test their assumptions using multiple methods, then refine their strategy based on what investors will actually see.

This multi-method approach gives credibility to your pitch and helps you avoid overvaluing or undervaluing your company.

How SeedScope Makes It Simple

Instead of building complex spreadsheets or guessing benchmarks, SeedScope brings all three approaches together inside an AI-powered dashboard. Founders upload their data, get an instant valuation benchmark, and receive a breakdown of what’s helping or hurting their perceived value.

The result is not just a number, but insight—a practical guide to improve your valuation before your next fundraising round.

If you’re a founder preparing to raise capital or simply curious about where your startup stands, try generating your report on SeedScope.ai. It’s a faster, more transparent way to see what your startup is really worth.