Six methods
What each method means for you
Each method, told from the founder's side of the table.
Bill Sahlman (HBS) · 1987
VC Method
Founder reading: this method backs into your pre-money from the VC's required fund return.
Dave Berkus · mid-1990s (2016 update)
Berkus Method
Founder reading: the $2M pre-revenue maximum you will read everywhere is the default, not a rule.
Bill Payne · 2001 (revised 2011)
Scorecard / Bill Payne
Founder reading: this is the method you can argue against.
Ohio TechAngels · 2010s
Risk Factor Summation
Founder reading: read this as the angel's risk-shopping list.
Equidam framework · Standard adaptation
DCF (early-stage adapted)
Founder reading: building a DCF reveals more about your plan than the resulting number.
Various · Standard
Comparables (market multiples)
Founder reading: this is the method you use to defend your number to the VC.