Growth
Pre-Seed Valuation: How to Value Your Startup Before Revenue
Written by
Lineke Kruisinga
Published on
June 23, 2025
Written by
Published on
Putting a value on your startup before you have revenue is tough but it’s a key step if you’re raising a pre-seed round. Pre-seed valuation means figuring out what your startup is worth in the very early stages, often with little more than an idea, a team, or a prototype. It helps determine how much equity you give to investors and sets the tone for future rounds. In this article, we’ll explain how to value a startup without revenue, what factors matter most, and which early-stage valuation methods founders should know.
Pre-seed valuation is the estimated worth of your startup before you’ve launched a product, generated revenue, or proven traction. It’s often the first time founders need to talk numbers, usually when raising from angel investors, friends and family, or early-stage VCs. At this stage, you’re selling a vision more than a business.
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Most early-stage startups don’t have the revenue or data needed for traditional valuation models. Instead, investors focus on potential:
⏩️Demystifying Valuation Methods for Early-Stage Startups
Getting your pre-seed startup value right is important. It decides how much equity you’ll give up in return for investment. It also affects how future investors will see your company. Set it too high, and you might scare off follow-on investors. Too low, and you risk giving away too much too soon.
Valuations vary depending on your market, traction, and team. Here's a rough guide:
Your position within that range will depend on things like early traction, how much funding you need, and investor appetite.
When you’re raising a pre-seed round, investors don’t have revenue or growth numbers to guide them. Instead, they focus on a few key things that signal future potential. These are the main startup valuation factors that can shape how investors see your early-stage startup.
1. The Founding Team
At this stage, investors are betting on you, not just your idea. A strong team with relevant experience, technical skills, or a proven track record will boost your pre-seed valuation. If your team has built or exited startups before or has deep knowledge of your industry that’s a big plus.
2. Market Size and Growth Opportunity
A great product in a small market has limits. But even a basic idea in a huge, growing market can excite investors. If your startup is targeting a large total addressable market (TAM), your potential upside increases and so does your valuation.
3. Product Stage
You don’t need a fully launched product to raise pre-seed funding, but some progress helps. Whether you have an MVP, a working prototype, or even just wireframes, showing that you’re moving forward makes you less risky in the eyes of investors.
Having something to show even a basic version, can be a key startup valuation factor.
4. Early Traction
Revenue isn’t expected at this stage, but early signals go a long way. Things like user waitlists, signed letters of intent, pilot customers, or strong social media interest can all improve your valuation. These signs prove that people care about what you're building.
5. Vision and Pitch Quality
A clear and inspiring vision can be just as powerful as a polished product. If your pitch shows confidence, big-picture thinking, and a solid plan for growth, it tells investors you know where you're headed and how to get there.
The way you tell your story can drive your valuation just as much as your actual progress.
6. AI Insight: It’s All About Potential
Unlike later-stage startups, pre-seed companies are rarely valued based on hard numbers. What affects startup valuation most here is potential, how big your idea could become, how capable your team is, and whether you’ve got any early proof points. In short, non-revenue valuation drivers matter more than ever.
Valuing a startup without revenue might sound impossible but there are a few helpful methods founders and investors use to come to a fair number. None of these are perfect, but they give structure to something that otherwise feels like guesswork. Here are the most common ways to approach pre-seed valuation.
1. The Berkus Method
The Berkus method breaks down your startup into five key areas: the idea, the team, the prototype, strategic relationships, and product rollout. A certain value is assigned to each area based on progress. This helps investors decide how much your startup is worth, even before revenue comes into play.
💡 It’s a quick, founder-friendly way to value a startup without revenue, especially if you're still building your product.
2. The Scorecard Method
The scorecard valuation method compares your startup to others that have already raised money in your industry or region. Investors start with an average valuation, then adjust it based on your strengths and weaknesses like team, market, product, and competitive advantage.
💡 It’s a helpful way to stay grounded in reality, especially when you’re unsure how much to ask for.
3. Risk Factor Summation Method
This method starts with a base (or median) valuation and adds or subtracts value based on 12–15 risk areas—such as the strength of your team, market competition, legal concerns, and funding needs. If your startup scores well across the board, your valuation goes up.
💡 This method is useful when investors want a more detailed breakdown of risks vs. rewards.
4. The Venture Capital Method
This one takes the opposite approach. Instead of looking at your startup today, it looks at what your company could be worth at exit. Then, investors work backwards based on the return they expect (often 10x at this stage). The result gives them an idea of how much they can invest now and what valuation makes sense.
💡 It’s common with VCs who are focused on long-term outcomes.
5. Gut Feel and Negotiation
If you can justify your number with a compelling story, some early traction, and strong team credentials, you’re in a good place. Investors will often have their own gut feeling about what your startup is worth.
💡 This happens more often than you think, especially when there’s no data to lean on.
At pre-seed stage, many startups use a SAFE (Simple Agreement for Future Equity) instead of setting a hard valuation right away. A SAFE lets investors put in money now in exchange for equity later, usually when you raise your next round. It’s a way to keep things moving when valuation is still unclear.
Talking about valuation can feel intimidating especially when your startup doesn’t have revenue yet. But good preparation makes a big difference. Investors don’t expect you to have all the answers, but they do expect you to understand your worth, know your market, and communicate your vision clearly.
So how do you actually prepare for this conversation?
The foundation of any good valuation discussion is a strong narrative. You need to explain:
Think of your story as the thread that ties everything together. Investors hear hundreds of pitches, what makes yours memorable?
Pre-seed investors don’t expect perfect data. But they do want proof that you’re making progress. Bring whatever validation you have, such as:
This shows you’re serious and signals early momentum two things that can push your valuation up.
Investors are looking to reduce risk. Expect questions like:
Being ready with honest, thoughtful answers builds trust fast.
This is where many founders trip up. You don’t need to guess the “perfect” number but you do need to be able to explain your reasoning. Don’t anchor too high because someone else in your space raised at a $10M valuation. And don’t anchor too low out of fear, either.
Use valuation methods (like the Berkus method or scorecard valuation method) to help you frame your ask. Look at similar pre-seed rounds in your region. Talk to advisors. The goal is a fair, justifiable range you can defend.
Pre-seed valuation is often fluid. Investors might push back or counter with a SAFE note and a cap instead. Stay open, but know your minimums. Think ahead about the equity you’re willing to give up and how that affects your cap table in the next round.
💡 One of the best pre-seed negotiation tips: aim for partnership, not perfection. A win-win deal builds long-term trust.
Before your next investor meeting, make sure you can confidently explain:
When you're talking to pre-seed investors, remember this: they’re not investing in what your startup is today they’re betting on what it could become. Since there’s often no product or revenue yet, they rely on a mix of instinct, experience, and key signals.
Here are the main things investors focus on when deciding if your valuation makes sense.
1. Return Potential
The big question on every investor’s mind is: Can this startup deliver a 10x return?
At the pre-seed stage, investors know that most startups won’t succeed—so they look for ones that, if they do work, can grow big. Your idea needs to show it has serious upside.
💡This is one of the core early-stage investor valuation criteria. They’re not just looking for progress, they’re looking for potential scale.
2. Risk vs. Reward
Startups at this stage are risky. So investors weigh your valuation against the level of risk they’re taking.
If your idea is promising but there’s no traction or product yet, a high valuation may feel too risky. But if you have a great team and some early validation, they may be more open to a higher number.
💡Understanding this balance is key to knowing what investors want in pre-seed rounds.
3. Skin in the Game
Investors want to know you’re all-in. That means you’re not just testing the waters, you’re committed to making this work.
They also want to see that founders still own a meaningful portion of the company. If you’ve already given away too much equity, that’s a red flag.
4. Cap Table Health
Your cap table—the list of who owns how much of your startup matters a lot.
If it’s already messy or heavily diluted, investors may worry about future rounds. A clean, simple cap table shows you're thinking long-term and protects your ability to raise more money later.
💡One of the best startup cap table tips: protect founder equity and be selective early on.
⏩️What Are The Benefits of an Early Stage Fund in Your Cap Table?
At pre-seed, investors aren’t obsessed with spreadsheets. They care about narrative fit (does the idea make sense now?), team potential (can this group execute?), and direction (is there a clear plan forward?).
It’s about the story, not just the stats.
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Startup valuation without revenue isn’t easy but it’s not just a shot in the dark either. At the pre-seed stage, investors focus more on your potential than on hard metrics. If you can clearly communicate your idea, highlight why your team is the one to make it happen, and offer early signs of traction or validation, you're already ahead. Don’t obsess over nailing the perfect number; aim for a valuation that’s fair, realistic, and defensible. In the end, it’s not just about closing a deal but about building a strong, long-term investor relationship.
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