Your company’s valuation is the estimated worth of your company at a particular point of time. More importantly, it serves as the basis of the estimated value of the equity rewards earned by your team.
In Upstock, there are several sources that you can select to justify the valuation figure you arrived at based on the funding round or growth stage your company is in. We call them "valuation sources."
They are as follows:
This valuation is the founder's best guess of the company’s worth based on factors such as the amount already invested in building the company and the founder’s personal estimate of its potential for growth and revenue.
This is the estimated value of the company before the usual investors come in to help fund the business. Pre-seed funding may come from angel investors, family members and close friends. At this stage, it is the founders and valuation experts that determine and estimate the company’s valuation.
Seed (Notes, SAFE, etc.)
This valuation is supported by an early-stage investment round with participation from angel investors, incubators and some venture capital firms. This post-money valuation is generally based on the deal terms of the round.
This valuation is taken from an intermediate investment round between the Seed round and the Series A round. It typically involves angel investors, venture capital firms, or early-stage investment funds.
This valuation is determined when a company successfully raises a new funding round participated by more established investors including venture capital firms. Companies raising capital in a Series A are focused on continued growth and expansion.
This valuation comes from a round participated by more established venture capital firms and some private equity firms. In a Series B, companies raise money to scale their businesses further.
This valuation is available to companies who have raised (or are raising) a Series C round where top venture capital firms, private equity firms, hedge funds and investment banks participate. A company raising a Series C is looking for one last financial push before an acquisition or initial public offering (IPO).
Series D+ (including Series E, F, etc.)
This valuation is available to companies who are still fundraising beyond Series C. Companies go into a Series D+ for various reasons such as wanting to get an extra boost before going public, to stay as a private company longer, or as a “down round” to fix a lower valuation in a prior round.
Professional Valuation (409A)
This valuation is sourced from and performed by an independent third-party auditor.
This is the company’s estimated worth as determined by the market.
Note: The list above is not exhaustive. This is just what Upstock uses.