"What valuation should I raise at?"

Step 0: Introduction

🎥 Intro Video (1:35)

If you only take one thing away from using this app, let it be this:

Valuations aren't picked out of thin air — they are largely based on the relationship between...

• the amount of money you need to reach your next milestone
• the amount of dilution you are willing to take to reach that milestone
• whether or not those two amounts match up with the market's appetite for your company

Contrary to what you see in the tech news, fundraising is rarely easy. That said, it can be much less painful if you have a solid team going after an excellent opportunity and are raising the right amount of money at the right level of dilution for your stage.

Here's feedback from a founder who used this application to determine their valuation:

Before using this tool, I never thought about how valuation is just an output of 1) money needed and 2) expected dilution, even though it's super obvious when stated.

So now I feel like I don't have to worry about valuation — just focus on the inputs.

This app will help you focus on the inputs (raise and dilution amounts) to determine your valuation.

Next: Raise Amount

Step 1: Raise Amount ($)

🎥 How much should I raise? (2:27)

The first step is to choose the range of money you think would be good to raise.

ℹ️ Discover Typical Ranges

While you might have an exact number in your head that you think is perfect, it's good to think about the minimum you'd need to accomplish your next milestone.

• Raise at least enough to give you 18 months of runway.
• If your numbers are outside of the typical range for your round type to get 18 months of runway, your burn rate is likely too high—you'll need to figure out how to be more frugal.
• When inputting a range into the calculator, keep it relatively narrow — ideally $500k (or less) between your min/max.
• If the range is wider than $500k, it's a sign you need to get a better sense of how much money you need to get to the next milestone.

Select your range (you can change this later):

Min Max
Next

Step 2: Round Dilution (%)

🎥 Dilution expectations (1:50)

The amount of dilution your company takes on each round is more heavily influenced by what is standard for the market at any given time — not your personal preferences.

ℹ️ Discover Typical Dilution

Unless you are raising a tiny amount of money relative to what is typical for your stage or you're one of the hottest companies raising, the standard dilution per round ranges from 15% to 20%.

Select your range (you can change this later):

Min Max
View Valuation Range

3) Post-Money Valuation ($)

Based on your inputs, we've generated a valuation range

If the valuation range seems surprisingly large to you, that is OK. It might need to be refined — we'll do that in the following steps.

The conventional advice you might have heard about fundraising is to pick a valuation and then tell potential lead investors that is what you're raising at.

It turns out that the more effective way to fundraise is to give lead investors a range in terms of both raise amount and dilution.

Doing this enables prospective leads to determine where they want to land regarding investment amount and ownership while falling within your set parameters. If you get multiple term sheets it also enables you to get a range of offers to compare and contrast.

Due to this, you'll likely tell a VC (conversationally — not in written materials like a deck) something like this:

Don't immediately close this tab now and start telling investors that — we should do more to hone in on this in the next step. If your range is larger than $500k raise and 3% dilution you'll likely want to tighten this further.

Valuation range will be displayed when you fill in the fields above. View Permutations

Step 4: Valuation Scenarios