Dave Berkus · mid-1990s (2016 update)
Berkus Method
Founder takeaway
Founder reading: the $2M pre-revenue maximum you will read everywhere is the default, not a rule. Berkus's 2016 update says users should set maximums appropriate to the industry and the times, and his own example puts a Silicon Valley big-data startup at $1.5M per element; at that rate the four pre-revenue elements sum to $6M, against $2M at the $500K default (our arithmetic, not a figure Berkus states). So the argument to have is about the per-element maximum for your region and sector, not about the elements. Berkus also says the method stops applying once a company has revenue, so move to Scorecard or VC Method at that point.
Best for
Pre-revenue early pre-seed.
Formula
Idea + 4 risk-reduction elements, default max $500K each (pre-revenue max $2M, post roll-out max $2.5M)Inputs
- Sound idea
- Quality team
- Prototype
- Strategic relationships
- Product rollout or sales
Caveats
- The $500K per element is a default, not a ceiling. Berkus's 2016 update lets the maximums move with the industry and the times: he gives a Silicon Valley big-data startup $1.5M per element against $500K for the same company in Nebraska
- The five elements are a suggestion too. The 2016 update lets you swap one out for a risk that actually matters to your company, such as FDA approval for a medical device
- Every element is a judgement call. There is no revenue multiple and no comp set to appeal to, so the angel's scoring is the valuation
Source
↗ https://angelcapitalassociation.org/blog/after-20-years-updating-the-berkus-method-of-valuation/Verified 2026-10-17.
Other methods