As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. I see it happen often in my angel investment group, and you can see it happen almost every week on the Shark Tank TV show. It’s like trying to sell a home still being built at next year’s dream market price.
Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.” You look like a chump, and probably won’t like their low-ball response. Investors know that valuations at startup early stages are negotiable, but they do expect that smart entrepreneurs understand the top three elements of a startup valuation would include the following.
