An investor looking to put money into an early-stage startup without revenue will need to rely heavily on the startup’s valuation report. This report is crucial for justifying the valuation and helping investors understand the potential of the opportunity. Here are the key elements the report should cover:
Company Overview
Provide a brief background on the company, its product or service, business model, target market, and competitive landscape. This context helps investors quickly grasp what the company does.
Growth Strategy and Financial Projections
Lay out the startup’s growth strategy and plan for acquiring customers. Provide projected financials including revenue, costs, and profitability over the next 3-5 years. Explain the major assumptions behind the projections.
Total Addressable Market Analysis
Analyze the estimated total addressable market size the company can realistically target. Include evidence for market trends and growth factors that support achieving scale.
Management Team
Give background on key executives and founders and evaluate the strength of the team. Assess if the team has the relevant experience to execute on their vision.
Funding Required
Estimate the total capital required to hit the projections and milestones. Provide a breakdown of how the funds will be used.
Detail the valuation approaches used and estimate a fair valuation of the company. Comparing to relevant pre-revenue peers can benchmark valuations. For a quick and low-cost approximate valuation, startups can also use our online valuation calculator. This provides an automated valuation estimate in minutes based on key inputs.
Investment Risks
Discuss the major risks and challenges, like execution missteps or new entrants, that could derail projections and affect valuations.
Investment Highlights
Summarize the key reasons why this startup and opportunity are compelling and worth investing in despite the risks and lack of current revenue.
A robust valuation report covering all these elements provides pre-revenue startups the best shot at impressing investors and raising capital. The report acts as the primary tool investors will rely on to make funding decisions.
