How Should You Value A Startup Without Revenue?

[@BrettFoxstartupceo]

To get your free Startup Pitch Deck Template go to: www.brettjfox.com/startup-pitch-deck-template-youtube/

[@wethepeopleofghana8441]

The moment you said if this content is resonating with you please like the like button now I did😊, and I rarely hit the button. I didn't because you didn't start by asking it, you did after you felt you have shared something valuable with your audience who are likely founders. That was brilliant!

[@BrettFoxstartupceo]

Thanks for the kind words. I appreciate it!

[@SamirDamle]

Thanks Brett. I have learned a lot from you already from just 3 videos I watched. These are gems probably no one else shared so precisely. Please keep these tutorials for startups coming. 🙏

[@BrettFoxstartupceo]

Thanks Samir. I'm glad you're finding value from my videos.

[@realarmani6184]

You're just so amazing with your points

[@BrettFoxstartupceo]

Thanks for your kind words. I am glad you're finding value in my videos.

[@zeytelaloi]

Never thought about it this way, makes it much easier to reason about these things.

[@BrettFoxstartupceo]

Glad this helped!

[@JDawg-4]

This was really helpful. Thank you!

[@BrettFoxstartupceo]

You're welcome. I'm glad you found this video useful.

[@rembautimes8808]

Great video thanks for sharing

[@BrettFoxstartupceo]

Thanks for your kind words, Rembau. I appreciate it.

[@jamesedwards1843]

Best video on the subject I've watched. Cheers, well done Brett. I wonder when there aren't really any other comps if your service or product is something new how can you estimate value and returns expectations for investor.

[@deepaksrivastava1825]

beautifully said and explained in a very simple way.......thanks

[@BrettFoxstartupceo]

You're welcome, Deepak. I'm glad you found the video useful.

[@mariya18-a]

ALL evaluation methods in comparison are valuable knowledge for inexperienced startupers 💯 Thank you for the video

[@BrettFoxstartupceo]

You're welcome. I'm glad you found the video useful.

[@unboxingstories4633]

Thanks man

[@BrettFoxstartupceo]

You're welcome!

[@SandalinaEvi]

Very helpful indeed :) thank you Brett!

[@BrettFoxstartupceo]

You're welcome, Andrea. I'm glad you found this useful.

[@junglemandude]

I have subscribed and will be following you, just from finishing this great content... well done and keep educating us

[@BrettFoxstartupceo]

Thanks. I'm glad you found value from the video.

[@thrivemindpilipinas]

fund raising is hard. put yourself in the shoes of your investors.

[@BrettFoxstartupceo]

Yep. The more you understand how investors approach investing in startups, the better your chances are of raising funding. Thanks Edmund.

[@holytie]

Been trying to write a business plan... Going tough. Thanks for sharing this. I hope to get more information about writing a business plan... Yea i hit the subscribe button!

[@BrettFoxstartupceo]

Awesome. Glad to have you onboard, and glad to be of help.

[@honestcomment]

7:00 thanks

[@BrettFoxstartupceo]

You're welcome.

[@thetoolist]

Hey Brett, thanks for this really interesting content. Simple, honest and straight to the point on subjects that are quite complex but crucial to understand.

[@BrettFoxstartupceo]

Thanks for your kind words. I'm glad your finding my videos useful.

[@chukwuemekannaji3802]

Thank you Brett. I'm amazed by how you remember the details of conversations you had decades ago. You are a great storyteller.

[@BrettFoxstartupceo]

Thanks for the kind words, Chukwuemeka! I appreciate it!

[@iqstat_cz]

Brilliant content, thank you sir!!

[@BrettFoxstartupceo]

You're welcome! I'm glad you liked it!

[@HealthCareAccessibilityResearc]

Brett, your insights were incredibly enlightening and made the concept of valuation much clearer for a company without revenue. I do wonder, however, if it's essential to include a valuation in our deck for our initial round of funding, considering our revenue status.

[@BrettFoxstartupceo]

I wouldn't do it. You can always talk about valuation, as I explained in the video, but I think you're falling into the exact trap you shouldn't fall into.

[@HealthCareAccessibilityResearc]

Thank you for your valuable feedback, Brett. I have a question that may seem off-topic, but I would appreciate your insights. Could you please clarify the distinction between "headcount" and "total active users" in the context of a tech startup?@@BrettFoxstartupceo

[@mariya18-a]

How can you evaluate, for example, a social network at the PreSeed, Seed, Round A: 1 - The founder should take as a basis the valuation of other social networks at the same rounds (What if these rounds were 10-20 years ago, now the operating costs are different) or the current valuation? 2 - Is it possible to evaluate a social network by comparing it with messengers, dating apps... - where the company’s evaluation depends on the number of active users

[@chiranjibpaulchoudhury5289]

Thank you so much. It’s very helpful

[@BrettFoxstartupceo]

You'e welcome, Paul

[@dtannenb]

I am going to be seeking investment in a pre-rev startup in the hospitality sector. It needs a fairly large investment since it requires building out commercial space and having sufficient working capital and I don’t want to be undercapitalized. I would like to approach Angel investors with a SAFE note. Do you think that is possible and a good way to approach my fundraising? I like watching your videos, I feel they give sound advice. I downloaded your template which turned out to be similar to one that I created. We are still finishing our research on some costs and financial assumptions but should be done in the next two weeks.

[@BrettFoxstartupceo]

Thanks for the kind words. It's cliche, but the market will tell you whether your strategy will work. It's hard to know until you get feedback whether it will work or not. Good luck.

[@CaseStudyQB]

Great straight forward video. I’m saving this!

[@BrettFoxstartupceo]

Thanks for the kind words. I'm glad you liked the video.

[@simonanthonyabou-fadel9611]

Thank you.

[@BrettFoxstartupceo]

You're welcome, Simon. I'm glad you found this useful!

[@anthonybelt7415]

Thank you....

[@BrettFoxstartupceo]

You're welcome, Anthony

[@mominakazim183]

Can we please have a detailed video on valuation through comparables (local and international start-ups) with cases, please?

[@BrettFoxstartupceo]

Thanks for the suggestion!

[@dboodtb2422]

I learned not to be precise about the cost of starting up a business to investors. Also be open ended about profit when asked because as years or the business stands, it might grow or decrease each year in profit.

[@BrettFoxstartupceo]

Thanks for sharing your thoughts. I'm glad you found the video helpful.

[@leonardonolasco4591]

Investors matured or not, seasoned or not, small big large or not used at least guaranteed future values or in many cases Discounted Cash Flow before entering any investments.

[@BrettFoxstartupceo]

I obviously don't agree with you, but thanks for sharing your thoughts.

[@Kuba5878]

Thank you again for sharing your knowledge! If we have several potential investors, how to properly convey the information that they are not the only willing investors and "encourage" negotiations? I guess we're not inviting everyone to the same negotiating table "who gives more" - or maybe I'm wrong? Best regards! Kuba

[@BrettFoxstartupceo]

You're welcome. Watch this video to learn how to negotiate with investors:: kzbin.info/www/bejne/g2ioY52pi7-DgJY

[@staffindia]

Good walk-through.

[@BrettFoxstartupceo]

Thanks! I'm glad you liked it.

[@rossjones2439]

You are awesome! Thank you!

[@ellliamelli3867]

Awesome info, love it, thanks! Do you offer free 1st consultations?

[@BrettFoxstartupceo]

Yes. You can apply on my website. www.brettjfox.com.

[@ellliamelli3867]

@@BrettFoxstartupceo hi Brett, ive just submitted via your website, thanks 🤗

[@mominakazim183]

This has to be the best video explanation of pre-revenue valuation. One question: can we understand the rationale with examples for varying ownership targets across different rounds? Why 20% ownership (lower than before) at series A, but 10 percent at seed? Also, why are expected returns changing / fzllinc at later rounds?

[@BrettFoxstartupceo]

Great question, Momina. It's all about demand. Please understand that investor demands change with the competition for deals. In a bad economy, there is less competition, so their ownership requests go up. I hope you get the idea. The best way you can, as a startup CEO, increase your company's ownership percentage is through competition for your deal.

[@chidiadiele]

Also note in a previous video, Brett mentioned that the more money you raise, the less equity you give our. So if you can get a bigger cheque for preseed, the better

[@tsaplin2528]

Very helpful video, thank you sir!

[@debm09]

Good content

[@BrettFoxstartupceo]

Thanks Deb!

[@Ohcommon54]

5:30 comparable transaction methodology

[@BrettFoxstartupceo]

thanks Mina

[@bigbanknewyork3655]

Great video

[@BrettFoxstartupceo]

Thanks!

[@jeffreymiller7778]

Great video. I just followed you on Twitter. This is what I tell my investors. I did a raise for just enough to have our working product. Meeting with big companies now. I took a little hit on the valuation at first but got 8 investors who are all entrepreneurs and CEOs themselves which bring extra advisory value.

[@BrettFoxstartupceo]

Congratulations on closing your funding.

[@cliffordindulgence5356]

Thanks for this, but i am not able to download the Free pitch template

[@BrettFoxstartupceo]

Yes, you sent me an email, and I sent you the template.

[@cliffordindulgence5356]

Thanks it's really helpful

[@CarlMyers-k3u]

Hi Brett! Invaluable info that's well delivered. Carl

[@BrettFoxstartupceo]

Thanks, as always, Carl! It's always good hearing from you!

[@DanielRLuke]

I find your videos interesting, and valuable and I'm going through all of them. I do have a question, though. Sure, "let the market decide", meaning, you throw the question back at the person who asked it. But on what basis do they decide? And if they offer a figure, how are you to know whether they are arriving at a reasonable valuation?

[@BrettFoxstartupceo]

It's a great question, Daniel. And, I think I'm going to give an unsatisfying answer. Investors decide on valuation based on competition for the deal, the potential of the company, market conditions, and past deals they've done. Early stage deals are somewhat boiler plate. Investors need to own a certain percentage of a company for it to make sense for them. From the startup's perspective, you have little leverage, especially with VCs, unless there is competition. Also remember there are other terms that are just as important as valuation. Watch this video for more: kzbin.info/www/bejne/g2ioY52pi7-DgJY

[@DanielRLuke]

@@BrettFoxstartupceo I thought it was a great answer, actually.

[@WaleedOsman-]

So, the best way to valuation the startup is looking for similar businesses and see how their valuation now, am i right? Or missing something in between 😢

[@BrettFoxstartupceo]

Hi Waleed, yes, that's correct. However, remember, the market, which is investors, sets the value for your startup. You can set whatever value you want for your company, but investors have to agree with you or will not get an investment.

[@WaleedOsman-]

@@BrettFoxstartupceo Dear Brett, Thanks for the tip.

[@BrettFoxstartupceo]

you're welcome@@WaleedOsman-

[@Truth-Lover-xc9ot]

Thank you for a relavant discussion. I was not thinking in those terms before... Can I ask how much if any weight angel investors place on the business model in terms of feasible achievability & scalability to decide whether to invest or not? Secondly what do you think if there is not an amazing team on paper in place but the model is very achievable & the raise pays for effective management?

[@bigbanknewyork3655]

What's the highest pre-seed or seed valuation have you ever seen with zero revenue?

[@BrettFoxstartupceo]

Not very high. Early stage valuations are very mechanical. Investors need to own a minimum percentage for a deal to make sense. Otherwise disciplined investors will pass.

[@wethepeopleofghana8441]

@@BrettFoxstartupceo Have a deal for $50K for 20% for a fintech company in Africa that is pre-launch, pre-revenue. What is your opinion?

[@chidiadiele]

Too much equity for that amount. I hope you do what's best for your startup. I'm also founding a fintech in Nigeria.

[@bigbanknewyork3655]

​@chidiadiele want to guess valuation of my startup Convochat? I'll guess yours too.

[@jeffreyyang9604]

Can you tell me why at 10:20 it would be an exception to set a price when you have a smaller set of angel investors?

[@BrettFoxstartupceo]

Actually, what I said was if you're raising money from 10 angel investors, you're better off setting the price. The reason is that when you have a large syndicate of investors, it's like herding cats. It would be chaos to try and find a lead investor in this situation, so you're better off just setting the price.

[@makatkplt]

I’ve got an Angel Investor but don’t know how to explain what his ROI should be. Seems I’m at the start up point where I don’t know what I don’t know. This guy just believes in me

[@Ohcommon54]

What if my startup has revenue but there isn’t a comparable product out there. How do I value my Startup in my case?

[@BrettFoxstartupceo]

Look for the closest comparable companies and see what they were valued at. Remember, the market determines the value of your startup, not you.

[@ironroad66]

I disagree on one point. dcf is the core of all valuation technics, either consciously or unconsciously. I would not nullify it so. no investment is made without being mainly based on future cash flow prospects. in some, cash flows are instant and in some, it is projected only in exit as one lump some in 10 years. this does not mean the valuation is not based on ecf. the only difference is the scheme and the timing of the cash flow.

[@BrettFoxstartupceo]

Thanks for sharing your thoughts.

[@logunmoe2217]

I'm looking to invest in a Saas company. They have 11k revenue, 400 customers 200k gmv. No profit. They expect to make 1M+ starting next year. With 1.5M revenue projection by Y3. What do you think they're worth? They want 100K for 10%.

[@grandgousier]

Investigate their model - they're going to grow revenue 1000x in year 1 and less than 1x years 2 and 3?

[@BrettFoxstartupceo]

Join my free community for startup CEOs here. There are weekly AMAs with me: Skool group: www.skool.com/zero-to-pitch-7541/about

[@precido8435]

Thanks for this interesting content, I’m from nigeria building a startup for 2years now, how can I get potential investors, have been looking for but not seen any, please kindly connect me with potential investors 🙏

[@studioamala-hb1ew]

How can our team get in touch with you?

[@nikijackson1]

I learned " keep my mouth closed and just keep it simple"

[@Marko-qy5eg]

100 meetings for one deal, 300 calls to get one meeting, then when you get an opportunity to do a deal they pay what the want? raising money is almost not worth it. If you spend the same effort getting customers you should get revenue and if you’re product and cost structure are good you don’t need outside money to grow. Same as the bank. The bank only helps people who don’t need it.

[@BrettFoxstartupceo]

Thanks for sharing your thoughts. The reality is he who has the money sets the rules.

[@bigbanknewyork3655]

Anybody want to guess a valuation for 11-month startup Convochat?

[@Kara.88877]

🙏

[@BrettFoxstartupceo]

You're welcome!

[@holytie]

❤❤❤❤

[@coulie27]

True story, haha

[@OZMeastro]

Whoever speaks first loses

[@BrettFoxstartupceo]

Always true in any negotiation. Thanks for adding your thoughts, Dan.

[@junaidkharal]

no non sense, to the point advice

[@BrettFoxstartupceo]

Thanks for the kind words!

[@mididoddi]

Hi Brett, very nice video. It helped me a lot. Also, I am not sure if I need any help right away but if I need in the future I may contact you. Do you mind sharing the price of your consulting fee.

[@BrettFoxstartupceo]

Glad you liked the video. You can go to brettjfox.com/coaching for more information.

[@mididoddi]

@@BrettFoxstartupceo Hi, I sent you an inquiry through your website about two days ago but haven't heard back from you yet.

[@SaltFreeBread]

I haven't clicked the subscribe button, even though I've been getting a benefit from every video of yours I've seen. My business might not work if the wrong investors get in. It is religiously motivated and doesn't seek to maximise profit. It exists to maximise certain social benefits and profit along the way. The religion says that if I do this I will get supported by God rather than by money and will not have to harm the world to get the money. It seems that it requires ideological alignment from social engineer investors who will stick around and be willing to help out with prayers more than profit-seeking capitalists. The business leverages natural capital like the rain and the crumbling of certain myths prevalent in the bread industry. So I see your approach as overmaterialised. I only watch it so I what not to do. I worked in a top investment bank before becoming a scientist and then a farmer. I hope you do some research into Islamic financing and make a video on what you find, God willing. Thank you very much for your work. It contains a very easy to understand flow and it opens up to give us exposure to your experience, which is generous. I kniw that editing and planning a video takes a lot of time so thank you for all your work. Please contact me at [e-mail] if you want to be correspond. I can help you transform your work into ethical financial investment designs that do not force developers to overmaterialise their entrepreneurial drive. On this note: do you have a video on investors who accept profit & loss outcomes vs. investors who expect profit but no loss?

[@debm09]

Good content

[@BrettFoxstartupceo]

Thanks for you kind words, Deb. I'm glad you found this useful.