The Berkus Method — Pre-Revenue, Pre-Traction
Developed by angel investor Dave Berkus, this method assigns a maximum dollar value to five risk dimensions: the quality of the idea, the prototype, the management team, strategic relationships, and product rollout or sales. Each dimension can add up to $500K of valuation, capping at $2.5M pre-money for a pre-revenue company.
It's a structured way to value a company when there's nothing to quantify yet. Investors use it to set an anchor — not as a precise calculation. If you're at idea stage with a strong team and early prototype, Berkus gives you a defensible number to start the conversation.
The Scorecard Method — Pre-Revenue with Comparables
The Scorecard Method starts from the average pre-money valuation of comparable pre-revenue startups in your region and sector, then adjusts up or down based on weighted factors: team strength (0–30%), size of opportunity (0–25%), product/technology (0–15%), competitive environment (0–10%), marketing/sales channels (0–10%), need for additional investment (0–5%), and other factors (0–5%).
If the regional average Seed pre-money is $3M and your team scores 120% of average across all factors, your valuation is $3.6M. It's more rigorous than Berkus and widely used by angel networks and early-stage VCs for pre-revenue deals.
The VC Method — Working Backwards from Exit
The VC Method calculates what your company needs to be worth at exit to deliver the investor's required return, then discounts that back to today. Formula: Post-Money Valuation = Exit Value ÷ Expected Return Multiple. If a VC needs 10x and expects to exit at $50M, your post-money valuation is $5M. Pre-money = Post-Money minus the investment.
This is the method implicit in CAPLINK's Fundraising Calculator. It makes the investor's return expectation visible — which is exactly the information founders need to evaluate whether a term sheet makes sense.
Revenue Multiple — The Standard for Post-Revenue SaaS
Once a company has meaningful ARR, investors typically value it as a multiple of trailing or forward revenue. The multiple is determined by growth rate, NRR, margins, and market conditions. At Seed, 8–15x ARR is typical for high-growth SaaS. At Series A, 6–12x. At Series B and beyond, public market comparables start to pull multiples down.
The multiple is not fixed — it's a function of your Rule of 40 score, NRR, CAC payback period, and the broader market environment. A company growing 150% YoY with 120% NRR commands a very different multiple than one growing 40% with 90% NRR.
DCF — Rarely Used at Early Stage, Essential at Growth Stage
Discounted Cash Flow projects future free cash flows and discounts them to present value. At early stage, the assumptions required (growth rate, margin expansion, terminal value, discount rate) are so speculative that DCF produces a wide range of outputs that depend almost entirely on the assumptions used.
VCs rarely use DCF at Seed or Series A — the uncertainty is too high for the model to add signal. At growth stage and late stage, where there's enough operating history to constrain the model, DCF becomes a cross-check on revenue multiple valuations. Investment bankers use it extensively in M&A and IPO processes.