How to value your startup like an investor

How to value your startup like an investor

A few months ago, a16z released a blog post on how to value your startup. Here are a couple TL;DR takeaways:

Public markets provide the best basis for recalibrating private growth valuations because public markets tend to see the effects of decreased valuations first.

Downturns hit different sectors differently, making it important to look at relevant public companies to best gauge where you stand.

In order to estimate where you stand, the article also outlines 3 steps:

  1. "Use the estimated change in valuation multiples from leading public companies in your space"
  2. "...add a growth- and efficiency-adjusted premium for your faster growth"
  3. "Then use this number to calculate the ARR you need to get to"

For simplicity, we've created a calculator here to figure out your own valuation.

What is your industry?

How much is your LTM (Last Twelve Months) of revenue? [1]

How hyped is your company?

Below average hype - You're growing less than 50% YoY in an unsexy space.
Average hype - You're growing around 50% YoY. Everything is pretty normal.
Pretty hyped - You're growing 100% YoY in a hot space.
Super duper hyped - You're growing 200-300%+ YoY in the hottest space. As hot as the sun, best in class, etc.

Estimated valuation [2]

[1] The a16z article users NTM (Next Twelve Months). We use LTM (Last Twelve Months) because it's easier data to fetch.

[2] If your revenue is small, this probably is not going to make a whole lot of sense.