How do you decide your startup valuation?

Vasudev Bailey / November, 2018


Vasudev (Vas) Bailey invests in disruptive tech, consumer and healthcare (therapeutic, diagnostic, device, digital) companies as a Partner at ARTIS Ventures. In this video, Vasudev explains why fundraising for the highest valuation it’s not always the best for your startup.

Video transcript:

How do you decide your startup valuation?

Always start with milestones. Ask yourself to get the next round, what are the activities, products, technologies or the people that you need to hire. What do you need to be able to show a significant value that you have added to your company to be able to raise the next round? How much money do you need for those set of activities? Don’t stop there, add a little bit of runway.

The market may change, things may fail along the way. So, have that little bit of room to be able to make those mistakes. That’s the right amount of money you should be able to raise. I’m a firm believer that if you are onto an idea if you overvalue yourself you may have a hard time raising fund in the future. It isn’t about how much you’re giving away.

When you’re starting off, it’s about creating the right ecosystem. It’s a fine balance between do you have enough cash in the bank to get to demonstrating those significant milestones that you say you will get to, but the other part is are you comfortable enough in giving away x percent of your company to the investors. I don’t think there is necessarily a perfect answer it just depends on where you are at, what round of financing is it, and what is your own ecosystem that you already have to get to the next stage.

I would hate to make a generalization on it. I think it is case-by-case also depends on whether you are a technology company or a healthcare company. The answer can vary along the way but I do think that sometimes I do notice in the market, especially in a market like this where there’s a lot of capital available. There is perhaps this inherent believe from the founders that they want to get to the highest valuation possible, and that may or may not be the best thing for them.



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