What's Your Start-Up Worth?

What’s It Worth?
John Ason, a successful angel investor, outlined his system for valuing companies in the January/February 2001 issue of Angel Advisor. His first criterion is to find companies with one or two founders so his experience can have an impact. Next, he limits the deals he considers to those with a $1 million to $5 million in pre-funding valuation. Less than $1 million he reasons are friends-and family bootstraps and over $5 million are venture capital candidates. How much a company is worth in the $1 million to $5 million range depends on meeting the following, cumulative milestones:

$1 million: Has good idea but not much else
$2 million: #1 plus has working prototype
$3 million: #2 plus has outstanding management
$4 million: #3 plus has meaningful revenues
$5 million: #4 plus has strong industry relationships offering potential customers

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