A big thank you to our earliest adopters for working with us to build out our platform -the future of fundraising and equity in Africa 🎉! For that, we are grateful for your time and success stories.
As a token of our appreciation, we’re offering you to get your startup’s free pre-money valuation delivered directly into your Raise account if you complete the steps below before January 25th, 2021. This is only for a limited time, so be sure to get started soon.
To get started, here is what we need you to do:
- Active your fundraising features and Deal Room by getting verified;
- Build your deal room; and
- Claim your free valuation through your account.
📑 Why is my company’s valuation important?
It describes how much a company might be worth before the company receives cash from an investment round. A valuation gives investors an idea of the current value of the business. It also shows the value of each issued share of the company. There is no standard method for estimating pre-money valuations of a company because they completely depend on the worth of the business.
Here are some basic formulas that all founders must know:
- Post Money Value = Pre Money Value + Value of Cash Added
- Pre Money Share Price = Post Money Value / (Previous Shares + New Shares)
Will investors recognize the valuation?
Truth is, it is up to you and your data. Valuation negotiations is an art, it should be backed by data. Come with data to back up your presentation about your company valuation. Investors should be acquainted with our valuation methods, but their practices vary based on professionalism and philosophy. No matter the methods used, both parties should enter negotiations prepared with their fair valuation so that they openly discuss its assumptions and consciously decide how far they want to go from their ideal case scenario.
When can I use my valuation?
The valuation methodology is suitable in case of the following:
- Awarding stock options and team awards
- Selling the company
- Intra-partners agreements
- Be reasonable with your financial projections. Just because you have a higher pre-money valuation, doesn’t mean that you will be profitable. You still have to do the work.
- Startups should take the lower pre-money bid if your business has the potential for a much larger value-added than another, offering better pre-money funding, but the added value opportunity is not the same.
- Often founders will defer their valuation in a seed round by doing a convertible note or a SAFE note. The logic is that it’s too early to guess what your valuation will be, and the seed investors and founders will let a professional VC value the business later. You can also decide to do a pre-money valuation at this stage for strategic reasons, like to see your growth.