What is Valuation?
Valuation means: “How much is this company worth right now?”
When you invest in a startup, valuation helps determine what slice of the company you get.
When you invest in a startup, valuation helps determine what slice of the company you get.
Example: If a company says it's worth $10 million and you invest $1,000, your share is $1,000 / $10,000,000 = 0.01%
Why does valuation matter?
- It sets your share of the company.
- Lower valuation = more upside if they grow.
- Fair valuation = less risk of overpaying.
Example: Why investors check valuation
If a startup is worth $10M and raises $1M, new investors together get 10% of the company.
$1,000 would buy 0.01%.
$1,000 would buy 0.01%.
Valuation Examples
See how different valuations affect your ownership:
Low Valuation
Valuation: $10MRaise: $1M
Investors own: 10%
$1,000 = 0.01% of the company
$1,000 = 0.01% of the company
High Valuation
Valuation: $40MRaise: $1M
Investors own: 2.5%
$1,000 = 0.0025% of the company
$1,000 = 0.0025% of the company
Companies want high valuations, but smart investors want a fair deal.
Smart Reg CF investors always check the valuation before investing.
Disclaimer:Investing in startups is risky, and you could lose all your money.
The examples above are for illustration only, not a guarantee.
This is not investment advice. Always read the company’s full documents before investing.
The examples above are for illustration only, not a guarantee.
This is not investment advice. Always read the company’s full documents before investing.
See Real Startup Valuations