How to Value a Startup With No Revenue: 5 Methods That Actually Work

When you're building a startup at the pre-seed or seed stage, you're often doing so without revenue, customers, or even a finished product. So how do you put a price on something that, essentially, doesn’t exist yet? The truth is, early-stage valuation is more art than science.

Traditional tools like Discounted Cash Flow (DCF) just don’t cut it when there’s no cash to flow. Instead, investors and founders lean on flexible, intuitive methods that assess potential, not performance.In this guide, we will break down five of the most popular startup valuation methods, show when to use each, and explain why they matter — so you can walk into your next pitch with clarity and confidence.

1. Berkus Method

Best for: Pre-revenue, very early-stage startupsDeveloped by investor Dave Berkus, this method assigns monetary value to key success factors in an early-stage company. The idea is to quantify the intangible elements that reduce risk:

• Quality of the idea
• Prototype or MVP (Minimum Viable Product)
• Strong founding team
• Strategic relationships (like advisors or potential customers)
• Product launch or market traction

Each category can receive a value of up to $500,000, leading to a maximum valuation of around $2.5 million. The Berkus Method is ideal when a startup lacks financial history but shows promise based on preparation and capability.

2. Scorecard Valuation Method

Best for: Startups in known markets or geographies where comparables existThis approach starts with the average pre-money valuation for seed-stage startups in a specific region or industry. The startup is then compared against that baseline on several dimensions:

• Team quality
• Size of the opportunity
• Product or technology
• Competitive environment
• Marketing/sales strategy
• Need for additional investment

Each dimension is weighted and scored. The final valuation is a percentage adjustment up or down from the average. This method is especially useful for investors who want a more objective comparison across similar deals.

3. Risk Factor Summation Method

Best for: Pre-seed startups where risk is the dominant concernThis method also starts with a base valuation, which is then adjusted based on the evaluation of 12 standard risk factors, including:

• Management
• Stage of the business
• Legislation/political risk
• Manufacturing risk
• Sales and marketing risk
• Funding risk
• Technology risk

Each factor is rated from +2 (very positive) to -2 (very negative), with monetary value adjustments (e.g., ±250k) added or subtracted accordingly. This method emphasizes risk over opportunity, making it suitable for conservative investors.

4. Venture Capital (VC) Method

Best for: Startups with clear exit potential and ambitious growth goalsThis method works backwards from a projected exit value. Here's how it works:

1. Estimate the startup's potential exit value (e.g., sale or IPO in 5–7 years).
2. Decide on the required return multiple (e.g., 10x).
3. Divide the exit value by the return multiple to determine the post-money valuation.
4. Subtract the investor's contribution to get the pre-money valuation.

For example, if a startup could exit at $50 million and the investor wants a 10x return, the post-money valuation is $5 million. If they invest $1 million, the pre-money valuation is $4 million.This approach is especially common in traditional VC firms focused on high-growth potential.

5. Comparable Transactions ("Comps")

Best for: Startups in active industries or markets with frequent funding roundsThis method compares your startup to others at a similar stage that have recently raised capital.

Key factors include:

• Business model
• Market size
• Growth indicators (user growth, engagement, etc.)
• Team background

Platforms like Crunchbase or PitchBook are commonly used to identify relevant comps. This method is fast and grounded in market reality, but it relies on having good data and relevant comparisons.

Conclusion: Choosing the Right Method

No single method is perfect. The best choice depends on your stage, industry, and available information:

• Use Berkus or Risk Factor if you’re pre-product or pre-revenue.
• Use Scorecard if you're in a startup-rich region with good comps.
• Use VC Method if you can realistically model an exit scenario.
• Use Comparable Transactions to validate your valuation based on recent deals.

Ultimately, early-stage valuation is about building trust and telling a credible story. These methods help investors and founders align expectations and move forward with confidence.

When startups are at pre-seed or seed stage (and often have no revenue yet), traditional valuation methods like discounted cash flow don’t work well. Instead, investors use practical, comparative, or intuitive approaches.

1. Berkus Method

Great for very early-stage, pre-revenue startups.You assign a dollar value to different risk-reducing milestones: Add it up: That’s your valuation (max ~$2M–$2.5M usually).

 2. Scorecard Method

Compares your startup to other startups in your region and sector.

Steps:

1. Start with the average valuation for similar seed-stage startups in your area.
2. Adjust based on:
   • Team (e.g., stronger = +30%)
   • Market size
   • Product/technology
   • Traction
   • Competitive environment
3. Apply weighted scores to get a new, customized valuation.

3. Risk Factor Summation 

Start with a base valuation and adjust up or down based on 12 risk factors, like:

• Market risk
• Technology risk
• Competition risk
• Founders’ experience

Each factor tweaks the valuation a little (e.g., ±$250k), and you sum up the changes.

 4. VC Method 

Used when investors want to back-calculate from a possible exit.Formula (simplified):Post-money valuation = Exit value / Expected return
Pre-money valuation = Post-money – Investment

Example: You think the startup could be sold for $50M in 7 years. Investor wants a 10x return. So: $50M ÷ 10 = $5M post-money → if investing $1M → pre-money = $4M.

 5. Comparable Valuation ("Comps") 

Looks at other startups that recently raised money:

• What stage were they at?
• How much traction did they have?
• What valuation did they raise at?

If you're building a social app and another similar app just raised $1M at a $4M pre-money, investors might consider you in the same range if you're at a similar stage.

TL;DR (Too Long; Didn't Read)

A Final Note: Your Valuation JourneyRemember, these frameworks are tools to help you start a conversation, not a definitive answer. As a founder, your job is to weave a compelling narrative around your numbers: showcase your team’s expertise, highlight your traction milestones, and outline a clear path to growth. Investors will respond to authenticity and preparedness as much as to projections.Embrace the art and science of valuation: use data where you can, tell your story where you must, and remain flexible through negotiations. In the end, the right valuation is one that reflects your startup’s potential and sets the stage for a partnership built on trust and shared ambition.Onward to building something extraordinary!