If there is just an idea and a bit of research, what is a fair valuation for an angel investor to invest in a startup at?
Ask YC: What is an appropriate valuation for a startup that is brand new?
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Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#2That's an unanswerable question the way you put it.
There is absolutely no information even about size of the potential market, business model, competitive arena, price points, required capital investment and so on.
You will have to do a bunch of homework (such as a minimalist business plan) to give you an idea of what you expect to do with your business, then you can go and put a value on it.
Garbage in -> garbage out.
YC has turned the angel investor game in to a horse race, they bet on the teams, to a much lesser extent on the ideas.
'conventional' angel investors will likely not be able to evaluate you (and possible co-founders) as a team, but they may be able to understand the business proposition behind your idea once you can explain it to them.
That will be central to the valuation, as well as your expertise and skill relative to what is needed to develop it and take it to market.
A couple of weeks of hard work should get you to the point where you will be able to answer your own question, after all, you're the one that's being diluted so you should know the value of what you have better than anybody.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#3# of programmers * months to MVP * credibility * $10k.
Even a mockup is better than nothing, but you'd do well to find your own tech partner.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#4Somewhere between $0 and $20,000, probably much closer to $0; depends on your credentials, the intuitive strength of your idea, and how hard it is to build.
You're asking the wrong question, though. Regardless of whether you can get an investment (and sure, you can always scrounge up $2000 from somewhere), this is the worst conceivable time for you to try to take an investment. You are optimizing for terms will ultimately cripple your business.
Build something first.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#5Others are saying you can't place a value. I don't buy that at all. People do it every day. The people that are truly capable of building a successful business are few and far between. An investor is lucky to find someone worth betting on.
From your perspective taking investment is a serious commitment. You're promising to to spend the next N years dedicating yourself to making the company successful. That's worth quite a bit if you're at all likely to succeed.
Just ask yourself how much equity would you sell and for what price?
I think a sane ballpark is something like 10-15% for $100-200k, 20-25% for $500k, or 30-35% for $1M. But again, that's just a ballpark.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#6Somewhere between $0 and $20,000, probably much closer to $0; depends on your credentials, the intuitive strength of your idea, and how hard it is to build. You're asking the wrong question, though. Regardless of whether you can get an investment (and sure, you can always scrounge up $2000 from somewhere), this is the worst conceivable time for you to try to take an investment . You are optimizing for terms will ulti…
Don't rule out the possibility that it is a bad idea that looks good (value Or an absolutely fantastic one (probably still < $20,000).
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#7$0.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#8Others are saying you can't place a value. I don't buy that at all. People do it every day. The people that are truly capable of building a successful business are few and far between. An investor is lucky to find someone worth betting on. From your perspective taking investment is a serious commitment. You're promising to to spend the next N years dedicating yourself to making the company successful. That's worth qu…
"People" aren't saying you can't place a value on it. "People" are saying you can't place a value on it based on 121 characters of text, less than half of which even describes the startup in question. If you rephrase the question as "What is this thing in my hand worth?" you haven't changed all that much....
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#9"Fair"? There's nothing fair about valuing a company at millions of dollars when it's just a few guys and an idea. It's about getting the right amount of investment while not selling too much of the company (but selling enough to make it with the investors time).
Check: http://www.avc.com/a_vc/2010/10/employee-equity-dilution.htm...
Because you've offered zero information to dial it in, $500k to $4m post-money as a wag. Depends on team, if you're in the valley, and your ability to create a market for your stock.
Re: Ask YC: What is an appropriate valuation for a startup that is brand new?
#10It depends primarily on the track record of the founding team. If the team has a history of being able to execute and the idea is promising, I'd say you can raise money on valuations between $1-3 million pre with just a powerpoint and some background research.
If the team has no track record, it will be much, much harder.