I have approached valuation many times, in many different ways, both for my consulting business and when I've raised capital for my startups. The short answer: it is based on the future earnings potential of your business, and in your case, an investors' belief in your vision/potential. Your story to support a valuation, without any revenue, will be built on reasonable projections and analogous evidence, and then discounted by the investor for risk. Every valuation exercise is unique, but the basics remain on how much risk they will assume for an expected return (IRR). If you would like me to help you quickly build a valuation story for your startup, or you have other questions, please give me a call.