Scorecard Valuation Method
What is the Scorecard Valuation Method?
The Scorecard Method is a valuation method based on a weighted average value adjusted for a similar company.
How does it work
The scorecard method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target.
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Such comparisons can only be made for companies at the same stage of development, in this case, for pre-revenue startup ventures.
The valuation goes up or down depending on your assessment of how your startup is doing in the 7 risk areas and the relative weighting you give the risks.
Work on your risks and how to cover them to improve your valuation. Challenge this with the VC method, the Transaction Multiples Method and the RFS.
A more in-depth reference on this method can be found at Bill Payne‘s website.
When to use it
Use this method if your company is pre-revenue and early stage and you are looking for growth financing.
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Try it for your own startup |