Startup Valuation Calculator

Formula

The formula to calculate the startup valuation is:

\[ V = AR \times LM \]

Where:

$V$ is the startup valuation ($)
$AR$ is the average annual revenue for the past 12-months or past 24-month period
$LM$ is the listing multiple. This should be the average multiple of annual earnings that companies in the same field have listed at when going public over the previous 5 years.

What is the value of a startup?

Determining the actual value of a startup is extremely difficult. People have made a living off of being able to catch companies early, and people have lost all their money trying to do the same. The real answer is that it’s impossible to know the exact value of a startup, especially early on. The formula provided above is for startups that have had a few years of consistent growth and are going to go public soon.

Example Calculation 1

Let's assume the following values:

Average Annual Revenue (AR) = $1,000,000
Listing Multiple (LM) = 5

Using the formula:

\[ V = 1,000,000 \times 5 = 5,000,000 \, \text{dollars} \]

The Startup Valuation is $5,000,000.

Example Calculation 2

Let's assume the following values:

Average Annual Revenue (AR) = $500,000
Listing Multiple (LM) = 3

Using the formula:

\[ V = 500,000 \times 3 = 1,500,000 \, \text{dollars} \]

The Startup Valuation is $1,500,000.