It depends. Are you seeking funding and if so, what type of funding? Many early stage companies that are seeking seed funding are structuring the investment in the form of convertible debt, which means you do not need a valuation. If, however, you are issuing stock, you need to determine a valuation. Let me know if you need more information.
No... but as the others say investors will make you think you do. And yet they should know that a pre-revenue company will change as quickly as the tide once they begin to operate. I would certainly have a clear vision and even financial plan as to where you see the revenue and profit growth is coming from... and they will derive the valuation merely from your projections and your ask. I find investors of any kind really latch on to the person, their vision, their passion, and of course their ability to get it done.
After that it's more 'Ok, I've got the funds, now let's go get em'".
Generally, no. But remember that if you are looking at compensating early employees or contractors with non-qual stock options, you may need to at least have a reasonable valuation method for determining fair market value to avoid ugly tax penalties under Section 409A of the tax code.
it depends if they are looking for investors they should know what there value is and that could be ip ,computers
The valuation for a company like this is $0.
The only reason people try and establish a valuation is to determine equity splits. However, this process is highly subjective and based on too many assumptions to have any basis in reality.
The better way to allocate equity is to use a dynamic equity split which will allow you to establish what I call a theoretical value based on the individual contributions of participants. This will be used to calculate accurate equity splits.
Terry, I'm curious as to why certain potential investors insist on equity. Like most of the other responses, I agree that your company is too early to have a valuation with any meaning. Further, money that they would invest is better spent on enhancing your R&D, not valuing stock. So convertible debt is the more expedient route. One exception is if your company is an LLC and you plan on issuing profits interests, which are like stock options in a corp. but are based upon the increase in the value of the LLC. For profits interests awards, a stake has to be put in the ground as of the date of the award.
What is Valuation
What for Valuation
Did Valuation bring any credibility
What Happened S&P valued one of the Top Rated Companies in the world immediately after obtaining AAA+ rated and submitted Pauper Suit at USA, Delaware, Welmington.
Price Water Cooper valued and assed and bet company now owned by another company after submitted pauper siut
E &, AGN Mac, all top rated valuers and accounting firms are int he Black list of huge Malpractice.
It it Valuation is a looting opportunity of common public or start up company
Knowledgeable and Think Tank could deliver a good verbatim to keep their sustainability