Founders are often puzzled by how VCs derive valuations for competitive Series A rounds. A competitive Series A round is an equity round where a company generally raises greater than $5 million led by a top-quartile venture capital firm.
During these Series A rounds, it is not uncommon for founders to receive multiple term sheets from lead investors at different valuations, and to feel uncertain about how to come to the correct valuation for the company.
The cause for this confusion is that VC valuation processes are often a black box, where there is no industry standard methodology for calculating valuation of seed to Series A startups. Some investors suggest that their valuations are a function of users, revenues, market potential or other forms of company traction, while others cite comparable deals as the primary justification for valuation……..
…….Below is a graph that shows a general set of Series A valuation ranges, demonstrating how these factors can impact pre-money valuations. Below the graph is greater detail on market, IP and growth impact on valuation.>>> READ MORE at: