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What is the valuation of a company that has just bootstrapped?

How is a lower bound value of an early stage startup calculated; that has an I.P. value worth V$ and the founders are starting to work on a vesting period of 4 years?

Since there can be many factors, It will be useful to have an answer in context of the following:

Scenario

3 founders, A, B and C have created an IP of value V$. They left jobs worth 100K per annum. per person. Assuming founder’s stock will vest over a 4 year period (annually). Neglecting value of synergy between founders. i.e. assuming 1+1+1=3

Net salary liability is assumed to be 250K per annum for 4 years for the purpose of my question. Other operational liabilities at 25K per annum.

P.S.
If there are factors that I have missed, then it would be nice to list those factors. I understand valuations are confusing and have several hidden factors. Given the information in this scenario is it possible to come up with an estimate?

Answer 8326

I will give it a try, but this is only harsh university gibberish:

There are a few points which really mater, while evaluating startups:

  1. Market: Is the market attractive (for your investor)? Do other VCs or investors already invest into that market? Think of it as competition.
  2. Reputation of the founder: how experienced are you guys in founding a company? have you already failed (and thats a good thing, because you already experienced this process)
  3. Innovation and security: How strong does your product differs from previous approaches? Are you guys able to secure or patent your idea?
  4. Traction and scaleabilty: How does your customer group adept your product? How many users do you have? how strong are you growing per invested $?
  5. revenues and proof of concept: Have you even sold a unit? Do you reach your own goals, so your further prediction are more valid?

Thing is: I can’t tell you how to rate your company this way, but least, if you can answer these questions in a profound way, you will have bright future.

Normally, the investor rates you on your pitch and these questions.

I also found this link, but i can’t tell you how reliable it is:

https://www.caycon.com/valuation.php

Answer 8327

Valuation is often an art rather than science, and it is especially true in this kind of situation.

There is no formula that you can plug numbers into to get an answer. Instead, you need to look at the product, the market, the founders, etc. and make a prediction of where the company will be in a year.

Your previous or current salaries are not very relevant to determining valuation. Many highly paid people would be terrible founders. :)

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