Full access to Entrepreneur for $5
Subscribe

How VCs Value Companies

By
This story appears in the April 2015 issue of Entrepreneur. Subscribe »

Over the years, I’ve heard plenty of entrepreneurs and VC colleagues talk about pre-product, pre-revenue and pre-profit valuations as if they can all be lumped into distinct categories. But while this type of analysis is part of the art and negotiation of early-stage company valuations, it is far from formulaic. 

When I hear VCs spout generalities such as “The going rate for post-product, pre-revenue companies is $5 million to $7 million,” I tend to think of Oculus VR, which was acquired by Facebook for $2 billion before its first product hit the shelf.  

Continue reading this article -- and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5!