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How do I value my B2B SaaS startup based on potential, if I have no paying customers yet?

Before you completely eat me alive, allow me to clarify:

– We have national and local brand interest
– We have verbal comittment of funds being allocated waiting for corporate approval
– We have an MVP, we are about to start private beta
– We have accumulated ~2,000 hours effort + $10,000 cash
– There are some competitors in the space but we have a HUGE advantage in one market segment.

But we NEED a salary. We have pretty much ran out of our own money, my tech cofounder had to get a full-time job (just started) and I will need to as well.

We have began aggressive fundraising, I’m paranoid that we won’t be able to raise without any REAL traction yet.

QUESTIONS:

1. How do I calculate value beyond 2,000 hrs x $200/hr = $400,000 + $10,000 cash = $410,000

2. If we’re looking to raise $250k – $500k how much equity should we be giving up?

3. What else can I do to get money before we run out?

Thanks for any insight.

  • Value of what? Your time? Or the “company”? Your time is worth nothing. No one is going to invest just so you can pay yourself back wages at some gross hourly rate. The company value is not equal to the hours and cash you’ve put into it either.
    Raise a convertible note for seed stage, debt instead of equity.
    Get a job.

    **Btw, ” We have verbal comittment of funds being allocated waiting for corporate approval”

    Is worth squadoosh. You sound like you’re fresh out of college or something, but the corporate world is filled with promises and slow moving parts.

    Reply

  • its very very hard.

    borrow money and get yourself to market.

    get some revenue moving then you can sell equity for a lot more money.

    no doubt you need to consider whether you have done enough to plant his business…if you don’t understand your value…its because you probably can’t yet:

    price your product

    figure out how to do sales

    have protected your intellectual property

    gotten sufficient buy-in from friends and family.

    you need a strong business plan and proforma….

    Reply

  • Value is based on what an investor is willing to pay. It’s a negotiation process, an auction process and in varies depending on deal terms.

    Are you selling common stock or preferred?

    Participating Preferred?

    Are the investors Friends and Family, Angel’s, Strategic, VCs? Each will value you differently.

    http://drivenforward.com/blog/raising-capital-cookbook-valuation

    http://drivenforward.com/blog/raising-capital-cookbook-valuation-aint-all-that

    Reply

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