Like to Travel? Do It With a Group of Awesome Entrepreneurs Learn More

Seed Stage Valuation Guide

I find it strange that with all the VC and Angel blogs out there, nobody seems to explicitly talk about the single most interesting term in startup financing: Valuation.  Look no further than Chris Dixon’s blog for elucidation on such nuanced terms as founder vesting, convertible notes with caps, etc…but where do you go to find out how much you should expect to give up at various stages in your company’s development.  In the past week alone, I’ve regrettably passed on more than one deal because the valuation the founder was seeking was an order of magnitude off from what was appropriate, and frankly I am pissed.  I am pissed that the earliest “committers” to these rounds aren’t advising founders that they are pricing their rounds incorrectly.  Notice I am not saying I am pissed that the early committers aren’t doing a better job of negotiating.  It’s not about negotiation, it’s about pricing a round in a way that does not lead to adverse selection when a founder goes out to fill the rest of their round.

By definition, the investors with the best deal flow will have a higher bar on what they do and do not invest in, and will be less likely to pay 2x the appropriate valuation for a deal when there are 3 others they are looking at concurrently that are better bets from a risk reward standpoint.  Conversely, the “me too”, “here today, gone tomorrow” early stage investor who is clamoring to get into a deal with the big name angel who committed early and independent of valuation will gladly pay up to play, but is that really the best move for a founder?  Probably not.  The reason that I’m not willing to overpay for an inflated seed round has nothing to do with returns for our fund.  It’s not a math problem I’m trying to solve where I say at $3M premoney we’re going to make a lot of money, and at $5M premoney we’re not.  Rather, I view a founder’s attempt at closing on their first round of financing at an out of whack valuation as a warning sign of a more fundamentally dangerous datapoint: bad judgment.  Whether I bet at $3 or $5 doesn’t matter all that much, but whether I am betting on CEOs with good judgment vs bad is an extremely good predictor of our fund’s overall success.  If you are raising your first round of capital, you should be pricing your round at the valuation where the absolute best investors in the market will all be excited and willing to participate, not at the maximum price where you can find some investors to participate.  If you’re not sure what these numbers are, I thought I’d explicitly articulate some signposts.  This is by no means absolute, and the market changes month to month, but here’s how I’d be thinking about it by stage of development and setup:

DISCLAIMER: this may vary by geography and past experience of founding team.  I write this more to begin a public dialog and less to personally define the market.  I welcome and encourage other investors to and entrepreneurs to explicitly publish what they’re seeing and feel is appropriate.

Still at your old job

You have an idea you’ve been thinking about, been working on it nights and weekends and maybe you’ve pulled together some folks to help you work on it.  You may have a prototype, you may not.  Everyone is ready to quit their jobs, you just need funding and then everyone is on board.

Valuation range: Don’t bother.  There is no market for your deal.  Nobody, not even friends and family should give you capital and you shouldn’t ask for it.  If you’re not committed enough to take the plunge without financing in place, then you’re not committed enough to ask for investment.  Quit your job.


You have an idea, and you’ve done a bunch of diligence but you haven’t begun to build anything.  Maybe you have some wireframes or designs, maybe you don’t.  Your idea is great and you’re chasing a big market.  You might even have domain expertise in the space.

Valuation range

12-18 months ago: $0 (no market for your deal, only friends and family capital available) – $2M pre-money (you have a personal brand having either started and successfully exited something or been very early at a startup love story)

Valuation range today: $0 (no market for your deal, only friends and family capital available) – $7M pre-money

Appropriate: This deal should only be getting done with a founder who has a proven track record, and in that case $2-3.5M is the appropriate range.  Everyone without a track record should be building prototypes and collecting data to validate their thesis and derisk  the deal by showing an ability to execute.

Average Size of deal: $300K-$700K

Protototype Built and in the market

You’ve assembled a team that is capable of getting something tangible done.  You’ve flushed out your vision and taken a first hack at realizing it through product.  You’ve gotten deep enough into the weeds that you’ve already identified the first set of assumptions you made that were wrong, and might even have some early data that says a few assumptions were right (i.e. user feedback, early signs of growth, market praise, etc.).  If you can make it here bootstrapped, this is I believe the optimal and appropriate time to raise a seed round.


12-18 months ago: $2M-$4M premoney

Today: $2.5-6M premoney

Appropriate: $3-4M

Size: $400-$1 million

Product in market and signs of growth or revenue

You pushed your product live 2-5 months ago.  Users are using it and either spreading it or paying for it.  You’ve build a team that is executing well and you are raising money to add resources that will support growth/expansion.  Not quite at the point where you have a sick viral coefficient or hockey stick curve, but you’re on the verge of product/market fit.  Questions are more about how big is the market and less about validating the earliest assumptions.  This is really an A round, and you shouldn’t be calling it a seed round even if you haven’t taken previous capital.

Valuation: hmmm. Ask Fred WilsonBijan SabetMark SusterRoger Ehrenberg, and anyone else with bigger funds who are blogging about bubbles and valuations to publish their signposts.  They’ll have a better sense than me.

Size: $1-5 Million

I think as investors we need to get transparent and explicit about what we think is appropriate and what we want to see from founders.  There will always be exceptions, and obviously the guy who founded Mint is going to get a different deal than the guy who just quit his job in consulting, but I don’t really understand why we aren’t publishing what we want to see change in the market.

150 Responses to Seed Stage Valuation Guide

  1. bing bring me here. Thanks!

  2. Ni hao, here from baidu, i enjoyng this, I come back again.

  3. This does interest me

  4. This does interest me

  5. Hi, here from baidu, i enjoyng this, will come back soon.

  6. Some truly wonderful content on this web site , appreciate it for contribution.

  7. I am not rattling great with English but I get hold this really easygoing to read .

  8. Intresting, will come back here later too.

  9. I was looking at some of your articles on this site and I believe this internet site is really instructive! Keep on posting .

  10. Respect to website author , some wonderful entropy.

  11. Just wanna input on few general things, The website layout is perfect, the articles is very superb : D.

  12. Respect to website author , some wonderful entropy.

  13. Fortnite says:

    Awesome, this is what I was looking for in bing

  14. I truly enjoy looking through on this web site , it holds superb content .

  15. Awesome, this is what I was searching for in bing

  16. planettools says:

    Cheers, great stuff, Me like.

  17. mac files says:

    Hey, happy that i stumble on this in bing. Thanks!

  18. I must say, as a lot as I enjoyed reading what you had to say, I couldnt help but lose interest after a while.

  19. Ellmicy says:

    Can Amoxicillin Cause Hypoglycemia Lymph Node Enlargement Canine Cephalexin [url=]cialis 20mg for sale[/url] Keflex And Bronchitis

  20. Ellmicy says:

    Can You Take Amoxicillin While Pregnant Viagra Stl [url=]cialis generic[/url] Amoxicillin Cats Sick

  21. “Best Blogpost! Hello mates, nice post and good arguments commented here, I am in fact_ enjoying by these.”

  22. I seldom leave a response, but i did some searching and wound up here . And I actually do have 2 questions for you if it’s allright. Could it be only me or does it seem like a few of the responses come across like written by brain dead individuals? 😛 And, if you are posting on other social sites, I’d like to follow anything fresh you have to post. Would you make a list of the complete urls of all your communal sites like your twitter feed, Facebook page or linkedin profile?

  23. ntaletsoly says:

    [url=]generic cialis usa[/url] best online pharmacy for cialis

  24. mtaletutgp says:

    [url=]buy generic cialis online[/url] order cialis paypal

  25. ltaletovrb says:

    [url=]buy levitra online usa[/url] levitra 10mg price

  26. ftaletjivz says:

    [url=]order generic viagra cialis[/url] cialis online canada

  27. gtaletsomp says:

    [url=]cheap cialis canada pharmacy[/url] order cialis online with mastercard

  28. qtaletedcp says:

    [url=]cheap viagra canadian pharmacy[/url] buy real viagra online

  29. ztaletatys says:

    [url=]order cialis online[/url] canadian cialis online

  30. ntaletnnky says:

    [url=]order brand viagra online[/url] order viagra 100mg

  31. ftaletueoh says:

    [url=]buy cialis cheap[/url] cheap cialis 20 mg

  32. jtaletcngc says:

    [url=]levitra how to take[/url] levitra how to use

  33. bolivia trek says:

    Im thankful for the post.Really thank you! Really Great.

  34. You made some respectable points there. I seemed on the internet for the issue and located most individuals will associate with along with your website.

  35. Elvera Hyett says:

    This web site is mostly a stroll-by for all of the info you needed about this and didn’t know who to ask. Glimpse right here, and also you’ll positively uncover it.

  36. buba suba says:

    pWK9zn Way cool! Some extremely valid points! I appreciate you writing this article and also the rest of the website is extremely good.

  37. I will immediately grab your rss feed as I can not find your e-mail subscription link or newsletter service. Do you’ve any? Please let me know so that I could subscribe. Thanks.

  38. Nice post. I was checking continuously this blog and I’m impressed! Very useful info specifically the last part 🙂 I care for such information much. I was looking for this particular info for a very long time. Thank you and good luck.

  39. Definitely, what a magnificent site and revealing posts, I surely will bookmark your website.Best Regards!

  40. Thanks-a-mundo for the article.Really looking forward to read more. Will read on

  41. I want to show appreciation to the writer for bailing me out of this dilemma. Just after scouting through the the net and getting solutions which are not powerful, I believed my entire life was over. Being alive without the solutions to the problems you’ve sorted out by way of your short post is a crucial case, and the ones which could have badly affected my career if I had not noticed your blog. Your actual natural talent and kindness in taking care of all the things was precious. I don’t know what I would’ve done if I had not come across such a thing like this. I can at this time look ahead to my future. Thank you very much for the high quality and effective guide. I will not be reluctant to endorse your web site to any person who wants and needs guidance on this subject.

  42. Would you make a list of all of all your public pages like

  43. Way cool! Some very valid points! I appreciate you writing this write-up and the rest of the website is very good.

  44. Major thanks for the article.Really thank you! Keep writing.

  45. I really liked your post.Really looking forward to read more. Keep writing.

  46. to read more says:

    I truly appreciate this article post.Really thank you! Want more.

  47. spy camera says:

    There is perceptibly a bundle to realize about this. I assume you made various good points in features also.

  48. dtaletbizq says:

    [url=]levitra free[/url] levitra cialis comparison

  49. for details says:

    Looking forward to reading more. Great article post.Much thanks again. Really Great.

  50. ytaletcqdc says:

    [url=]how to buy cialis with a prescription[/url] daily use cialis

  51. Keep working ,fantastic job!

  52. ptaletpjve says:

    [url=]do you have to take cialis everyday[/url] cialis for daily use cost

  53. Thank you for your article.Much thanks again. Really Cool.

  54. Wow, great blog article.Really thank you! Will read on

  55. ltaletmcax says:

    [url=]cialis tadalafil 10mg[/url] cialis high blood pressure

  56. italetluhu says:

    [url=]buy cialis generic[/url] lilly cialis coupon

  57. Thanks for another excellent article. Where else could anyone get that type of info in such an ideal way of writing? I ave a presentation next week, and I am on the look for such information.

  58. etaletkezy says:

    [url=]pfizer viagra 25 mg[/url] viagra and cialis together

  59. otaletzwvp says:

    [url=]super viagra generic[/url] is 100mg viagra safe

  60. vtaletabev says:

    [url=]do you have to have a prescription for viagra[/url] viagra user reviews

  61. btalettggk says:

    [url=]levitra doses[/url] levitra super active plus

  62. italettdwk says:

    [url=]cialis dry mouth[/url] cialis 100 mg 30 tablet

  63. xtaletyrfs says:

    [url=]is 5mg of cialis enough[/url] australian generic cialis

  64. staletkeek says:

    [url=]buy 5mg cialis[/url] does cialis make it harder to ejaculate

  65. xtaletxjez says:

    [url=]20mg cialis[/url] where is cialis manufactured

  66. htaletpgxj says:

    [url=]viagra medicine side effects[/url] can you make viagra at home

  67. rtaletnvrj says:

    [url=]price viagra[/url] does viagra add size

  68. gtaletyfel says:

    [url=]is it legal to buy cialis online in canada[/url] over the counter cialis equivalent

  69. ptalethzki says:

    [url=]cialis cvs[/url] price of 5mg cialis

  70. Thanks-a-mundo for the blog post.Really thank you! Really Great.

  71. Terrific work! That is the type of information that are meant to be shared around the net. Shame on Google for not positioning this put up higher! Come on over and consult with my site. Thanks =)

  72. btaletdyoe says:

    [url=]cialis 10 mg[/url] cialis overnight

  73. vtaletiwcd says:

    [url=]pills better than viagra[/url] can normal person take viagra

  74. XLeora says:

    Hi admin. It was hard to find this site in google.
    It’s not even in top10. You should focus on strong backlinks from
    top websites in your niche. I know of a very effective
    free method to get strong backlinks and instant traffic.
    The best thing about this method is that you start getting clicks right away.
    For more info search in google for: masitsu’s tricks

  75. torrentz says:

    Muchos Gracias for your blog article.Really looking forward to read more. Really Cool.

  76. indeed, as bryan caplan suggests, in the past the zeal of an insurer to guard

  77. Major thankies for the blog post.Thanks Again. Really Great.

  78. That is a really good tip particularly to those fresh to the blogosphere. Brief but very accurate information Appreciate your sharing this one. A must read post!

  79. I went over this site and I think you have a lot of good information, saved to my bookmarks (:.

  80. This blog is really entertaining as well as factual. I have found many helpful things out of it. I ad love to come back again soon. Thanks a bunch!

  81. Wow, amazing blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your web site is fantastic, as well as the content!

  82. I have been exploring for a little for any high quality articles or blog posts on this sort of area . Exploring in Yahoo I eventually stumbled upon this web site. Reading this info So i’m glad to exhibit that I have a very good uncanny feeling I discovered exactly what I needed. I most indisputably will make certain to do not forget this website and provides it a look regularly.

  83. You ave made some good points there. I looked on the internet for additional information about the issue and found most individuals will go along with your views on this website.

  84. Hey would you mind sharing which blog platform you’re working with? I’m going to start my own blog soon but I’m having a difficult time selecting between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your layout seems different then most blogs and I’m looking for something unique. P.S Sorry for getting off-topic but I had to ask!

  85. Poker Online says:

    therefore considerably with regards to this

  86. You made some good points there. I looked on the internet for the subject and found most individuals will consent with your website.

  87. click here says:

    Wow! This could be one particular of the most helpful blogs We ave ever arrive across on this subject. Basically Excellent. I am also an expert in this topic therefore I can understand your effort.

  88. There are some fascinating time limits in this article but I don’t know if I see all of them center to heart. There’s some validity however I’ll take hold opinion until I look into it further. Good article , thanks and we would like extra! Added to FeedBurner as well

  89. Very informative blog post.Thanks Again.

  90. iOS says:

    You made some first rate points there. I regarded on the web for the problem and located most people will associate with together with your website.

  91. I?d must test with you here. Which isn at one thing I usually do! I enjoy studying a put up that will make people think. Additionally, thanks for permitting me to remark!

  92. With a Nike authentic nike jerseys Styles. authentic nike

  93. I wanted to thank you for this great article, I definitely loved each and every little bit of it. I have bookmarked your web site to look at the newest stuff you post.

  94. I’ve been having issues with my Windows hosting. It has set me back quite a bit while making the next list. This is the current list that I have. I should add another list in less than a week. I’ll let you all know when the next list is ready. Thank you for your patience.

  95. What as Happening i am new to this, I stumbled upon this I have found It positively helpful and it has helped me out loads. I hope to contribute & aid other users like its helped me. Good job.

  96. I was suggested this website by my cousin. I am not sure whether this post is written by him as nobody else know such detailed about my problem. You are wonderful! Thanks!

  97. Prosper Noah says:

    The website style is ideal, the articles is really excellent :

  98. Thanks-a-mundo for the article.Thanks Again. Really Great.

  99. I think this is a real great article.Much thanks again. Will read on

  100. What as up to every body, it as my first visit of this blog; this blog carries awesome and truly fine information for visitors.

  101. Teaganica says:

    It as very effortless to find out any matter on web as compared to books, as I found this paragraph at this web page.

  102. I really liked your blog.Thanks Again. Cool.

  103. Thanks for the article.Really thank you! Will read on

  104. I think other web-site proprietors should take this site as an model, very clean and excellent user genial style and design, as well as the content. You are an expert in this topic!

  105. wow, awesome blog.Thanks Again. Want more.

  106. I value the blog.Really thank you! Fantastic.

  107. to read more says:

    Thank you, I have recently been looking for information about this topic for ages and yours is the greatest I have discovered till now. But, what about the conclusion? Are you sure about the source?

  108. Thanks a lot for the post.Thanks Again. Really Cool.

  109. ??? ??? ??????? ???? ?? ????? ????? ?????? ??? ???? . ??? ??????? ????? ???? ?????? ??????? ?????? ??????? ???? ????? ???? ??????? ??? ?????? ??? ????? ??????? ?????? ????? ????????.

  110. minecraft says:

    I every time emailed this web site post page to all my friends, since if like to read it
    next my links will too.

  111. Oh man. This site is amazing! How did you make it look like this !

  112. ytalettudk says:

    [url=]how long does it take for a viagra to work[/url] viagra sale

  113. Rory Murrell says:

    My brother suggested I might like this web site. He was once totally right. This put up truly made my day. You cann’t consider just how much time I had spent for this info! Thanks!

  114. ttaletuwwe says:

    [url=]how is cialis prescribed[/url] 100mg viagra vs 20mg cialis

  115. rtaletuqrl says:

    [url=]how to order cialis[/url] cheap cialis uk

  116. minecraft says:

    I like it when people get together and share ideas. Great blog, keep it up!

  117. staletvdnq says:

    [url=]order cialis online no prescription[/url] cialis order online india

  118. minecraft says:

    Wow, this piece of writing is fastidious, my sister is analyzing these kinds of things, therefore I am going to convey her.

  119. ktaletjxfu says:

    [url=]levitra patent expiration[/url] levitra cheapest price

  120. You need to take part in a tournament for starters of the finest blogs on the web. I will suggest this website!

  121. qtaletoiri says:

    [url=]buy cheap levitra no prescription[/url] levitra reviews

  122. qtaletdsiq says:

    [url=]buy viagra online usa[/url] online pharmacy viagra

  123. when it comes to tv fashion shows, i really love Project Runway because it shows some new talents in the fashion industry“

  124. otaletpfyr says:

    [url=]order viagra cheap[/url] order viagra pills

  125. qtaleteacx says:

    [url=]generic viagra online pharmacy[/url] order cheap generic viagra

  126. minecraft says:

    naturally like your web-site however you
    need to check the spelling on several of your posts. Many of them are rife with spelling problems and I to find it very bothersome to tell the truth
    nevertheless I’ll surely come back again.

  127. review says:

    Its called Beautiful Girls- by:JoJo…..its a reply to Beautiful Girls- Sean Kingston

  128. dtaletghjg says:

    [url=]levitra dosage[/url] is levitra generic

  129. ztaletswdc says:

    [url=]levitra vs cialis vs viagra[/url] cheapest price for levitra

  130. minecraft says:

    Wow that was strange. I just wrote an extremely long comment but after I clicked submit my comment didn’t show up.

    Grrrr… well I’m not writing all that over again. Anyhow,
    just wanted to say wonderful blog!

  131. dtaletneii says:

    [url=]order cialis online with mastercard[/url] canadian online pharmacy generic cialis

  132. mtaletpako says:

    [url=]levitra cheapest price[/url] recommended dosage of levitra

  133. I keep listening to the news update talk about getting free online grant applications so I have been looking around for the finest site to get one. Could you tell me please, where could i get some?

  134. utaletbgsf says:

    [url=]buy viagra internet[/url] viagra prices

  135. minecraft says:

    Hello, Neat post. There is a problem along with your
    web site in internet explorer, would check this?
    IE still is the marketplace leader and a huge element of
    other people will omit your excellent writing due to this problem.

  136. staletsasu says:

    [url=]generic viagra for sale[/url] cheap viagra tablets

  137. ctaletowkv says:

    [url=]order viagra online cheap[/url] order viagra 100mg

  138. otaletxrya says:

    [url=]order viagra air travel[/url] womens viagra pill

  139. btaletvdxb says:

    [url=]viagra online sales[/url] order viagra softtabs

  140. utaletgzsu says:

    [url=]viagra online[/url] cheap viagra from canada

  141. ktaletqtfl says:

    [url=]how to order cialis[/url] buy cheap cialis generic

  142. minecraft says:

    Terrific article! This is the kind of information that are meant to
    be shared around the internet. Disgrace on the seek engines for now not positioning this
    post higher! Come on over and seek advice from my website .
    Thanks =)

  143. italetikup says:

    [url=]order cialis in usa[/url] order cialis now

  144. Wow, great blog.Really thank you! Keep writing.

  145. to read more says:

    Very nice post. I just stumbled upon your blog and wished to say that I have really enjoyed browsing your blog posts. In any case I will be subscribing to your feed and I hope you write again soon!

  146. Life Jackets says:

    This site was how do I say it? Relevant!! Finally I have found something that helped me. Thanks!

  147. Major thanks for the blog. Really Great.

Leave a Reply

Your email address will not be published.