### How is the valuation of a startup calculated?

I would like to know how is the valuation of a premoney startup calculated?

We used this article last year, to value a startup I was working with and it worked out quite well. The investors own valuation was within 10%.

Best of luck.

There are a lot of different ways people use to calculate valuation. Here are two caluclators, actually:

The actual valuation calculation is determined differently depending on your reason for why you are doing it.

The valuation of your company is the amount that someone is willing to pay you for it. If the owner decides not to take the offer, then the value of the company is higher than that.

Now, experts use this formula to calculate valuation:

V = P x M

V is the valuation
P is the Profit of the company. This is typically measured as EBITDA. This can also be R for Revenue in the case of technology companies.
M is the multiple determined by the industry.

A good company is valued at the industry average.
A company with issues is valued below average.
A company with strong strategic assets (including their potential for future profits, a good team, good documentation, etc) will be valued above average.

Its only *slightly* voodoo.