Valuation Methods
Every formula with full mathematical derivation, assumptions audit, worked example, and textbook cross-reference.
Scorecard Method
Adjust average valuation by weighted factor scores for pre-revenue startups. Uses 7 factors (Team, Product, Market, Competition, Marketing, Funding Need, Other) with standard weights from the textbook.
Berkus Method
Value a very early-stage (idea to prototype) startup by scoring 5 key risk factors, each worth up to $500K (max $2.5M).
VC Method
Work backward from expected exit value to determine current post-money and pre-money valuation. Uses target return multiple to discount terminal value.
VC Method — Pre-Money
Determine pre-money valuation by subtracting the investment amount from the post-money valuation.
Terminal Value (Exit Multiple)
Estimate terminal value by multiplying projected revenue by an industry exit multiple.
SaaS LTV (Lifetime Value)
Calculate the Lifetime Value of a SaaS customer based on Average Revenue Per User (ARPU), gross margin, and monthly churn rate.
SaaS CAC (Customer Acquisition Cost)
Customer Acquisition Cost = Sales & Marketing Expense ÷ New Customers acquired.
SaaS NRR (Net Revenue Retention)
Net Revenue Retention accounts for expansion within the existing customer base.
SaaS Magic Number
Magic Number = Net New ARR ÷ Prior-Quarter Sales & Marketing expense. >0.75 is efficient growth.
SaaS Rule of 40
Rule of 40 = Revenue Growth Rate + Profit Margin. ≥40% signals healthy balance of growth and profitability.
SaaS CAC Payback Period
Months to recover CAC from a customer's monthly gross profit.
SaaS Revenue Multiple Valuation
Valuation = ARR × Market Revenue Multiple (SaaS typically 5–15x ARR).
P/E Ratio
Price-to-Earnings ratio: Market Capitalization ÷ Net Income.
P/S Ratio
Price-to-Sales ratio: Market Capitalization ÷ Revenue.
EV/EBITDA
Enterprise Value ÷ EBITDA — a capital-structure-neutral multiple.
EV/Revenue
Enterprise Value ÷ Revenue — for growth-stage companies without profits.
CAPM (Capital Asset Pricing Model)
Cost of equity: E(R) = Rf + β × (Market Return − Rf). Returns a decimal rate.
Startup-Adjusted CAPM
Adds size premium and illiquidity premium to the base CAPM for early-stage companies.
Present Value
PV = FV ÷ (1 + r)^n — discount a future cash flow to today.
Annuity Present Value
PV of a series of equal periodic payments.
Poisson Probability
Probability of exactly k events given a mean rate λ (e.g., k acquisitions per year).
Single-Round Dilution
Calculate ownership dilution from a funding round: new ownership = investment ÷ post-money.
Common Stock Discount
Discount between preferred and common share value (common stock typically 30–80% below preferred).
OPM Common Stock (Option Pricing Method)
Option-pricing model for common stock valuation — treats common equity as a call option on enterprise value.
Venture Debt Dilution
Dilution impact of venture debt warrants on equity value.
GMV Multiple Valuation
Marketplace valuation = GMV × Market GMV Multiple (typically 0.3–0.5x GMV).
Metcalfe's Law (Network Value)
Network value = k × n^α. Theoretical α=2; empirical platforms use α≈1.2–1.5.
API Access — Free & Open
MCP-compatible JSON-RPC endpoint. No API key required. 45+ tools available on Vercel. Full 60+ tool library via Python package.
/api/health — Health check + tool inventory/api — MCP JSON-RPC 2.0 (initialize, tools/list, tools/call)/api/calculate — Generic calculator endpoint with step-by-step traceabilityResources
Wiki — Theory & Derivations
13-step Scorecard derivation, glossary, notation table, and method deep-dives.
PyPI Package
pip install startup-valuation. Python 3.10+. MIT licensed.
GitHub Repository
Source code, CI/CD pipeline, contributing guide, open source.
Companion Textbook
338 pages · 15 chapters · 300+ exercises · 20+ cases. By Simon Mak.
Why Open Source?
Every formula is auditable. Every number traces to a textbook source. No black boxes. No proprietary math. Trusted by the auditor community.
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