Bill Sahlman (HBS) · 1987
VC Method
Founder takeaway
Founder reading: this method backs into your pre-money from the VC's required fund return. If the VC tells you 'we need to see a 10x', the method literally divides their projected exit by 10 to set your valuation. Push back on the exit value, not the multiple — the exit value is where the real negotiation happens.
Best for
Late-seed and Series A onwards.
Formula
Pre-money = (Exit value / Required ROI) - InvestmentInputs
- Projected exit value
- Target multiple (10x for Series A)
- Investment amount
- Expected dilution to exit (50-70%)
Caveats
- Wildly sensitive to exit-value assumption
- Required ROI varies by stage
- Adjust for expected future dilution
Source
↗ https://gust.com/blog/startup-valuations-101-the-venture-capital-method/Verified 2026-06-03.
Other methods