How to Value a Pre-Revenue Startup

Last updated: 2 November 2026

You value a pre-revenue startup by blending methods such as Berkus, scorecard and the VC method, since there is little revenue; the result is an evidence-backed negotiation opening, not a fixed price.

Why is valuing a pre-revenue startup hard?

A pre-revenue startup has little or no revenue, so valuation rests on team, product, market and assumptions. Investors are put off by unrealistic valuations. Ebico recommends blending three methods: Berkus, Scorecard and the VC method.

What is the Berkus method?

The Berkus method is a qualitative method for pre-revenue startups. It uses five factors: a sound idea, a prototype, a quality management team, strategic relationships, and a product rollout or sales plan. Each factor can score up to £500,000, so the total potential valuation is up to £2,500,000. In Ebico’s example the scores are £400,000, £300,000, £400,000, £0 and £400,000, which total £1,500,000.

What is the scorecard method?

The scorecard method values a startup as the average pre-money valuation of similar startups in your region and sector, multiplied by a total score percentage. Ebico’s example weights are team 30%, size of opportunity 25%, product or technology 15%, competitive environment 10%, marketing and sales channels 10%, and other 10%. With an average pre-money valuation of £2.6m, the resulting value is £2,093,000.

What is the VC method?

The VC method values today as (revenue at exit x revenue multiple) / (1 + required return) ^ years to exit. Ebico’s inputs are exit revenue of £2,812,000, a multiple of 3, a required return of 30%, and an exit in year 5. This gives £2,272,060 post-money. With an investment of £1,000,000, the pre-money value is £1,272,060 and the investor stake is 44.01%. Required returns are typically 30–70% depending on risk, and exits commonly take 5–7 years for pre-seed and seed. The simple model ignores future dilution.

How do you combine the methods?

A blended valuation is (Berkus + Scorecard + VC method) / 3. Using Ebico’s figures, that is (£1,500,000 + £2,093,000 + £2,272,060) / 3 = £1,955,020. Raising £1,000,000 at a £1,955,020 pre-money valuation gives a post-money value of £2,955,020 and an investor stake of 33.8%. Pre-money plus investment equals post-money.

What about UK tax-relief limits?

SEIS companies can raise at most £250,000 and must have gross assets not over £350,000. A valuation is therefore not the same as the amount raised. Readers should check HMRC guidance or take advice on tax matters.

Worked scorecard example (extra detail, Ebico)

Ebico’s scorecard for a fictional machine, BorePro 200, scores each factor as a share of its weight: team 80% of 30% = 24.0%; size of opportunity 90% of 25% = 22.5%; product or technology 90% of 15% = 13.5%; competitive environment 85% of 10% = 8.5%; marketing and sales channels 70% of 10% = 7.0%; other, meaning strategic relationships, 50% of 10% = 5.0%. The total is 80.5%. Multiplying £2,600,000 by 0.805 gives £2,093,000. The weights must total 100%.

Worked Berkus example (extra detail, Ebico)

The Berkus scores are: sound idea £400,000 of up to £500,000; prototype £300,000; quality management team £400,000; strategic relationships £0, because there are no formal partnerships yet; product rollout or sales plan £400,000. These total £1,500,000. Ebico explains each score with a plus and a minus. A working prototype for boreholes up to 200m is a plus, but it needs more testing for durability.

VC method in more detail (Ebico)

The five-year revenue forecast is £848,000, £1,140,000, £1,558,000, £2,112,000 and £2,812,000, from machine sales, service and parts. Exit revenue of £2,812,000 multiplied by 3 gives £8,436,000. Discounted at 30% for 5 years, using 1.3^5 = 3.71293, gives about £2,272,060. The investor stake is £1,000,000 / £2,272,060 = 44.01%. With 1,000,000 shares before, post-money shares are 1,000,000 / (1 – 0.4401) = 1,786,126, so investor shares are 786,126 and the price is £1.27 per share. Ebico suggests a 2–4x multiple on year-five revenue and 3x as a benchmark for green-tech hardware. Founders who base year-five revenue on defensible data avoid triggering a higher required return. Higher projected growth in a short time can look riskier, so investors may demand a higher internal rate of return.

Why not use only one method?

Berkus focuses on qualitative readiness, the scorecard compares with similar startups, and the VC method values the upside through an exit lens. Use them together as a blended stack, not in isolation. The simple VC model does not consider future dilution and future investment requirements. All BorePro data in the guide is fictional and illustrative.

What do you do with the number?

At a £1,955,020 pre-money valuation and a £1,000,000 raise, the investor owns 1,000,000 / 2,955,020 = 33.8%. If you raise £500,000 at the same pre-money valuation, the investor owns 500,000 / 2,455,020 = 20.4%. A smaller raise at the same valuation means less dilution. The valuation is the opening of a negotiation, backed by evidence.

Method	Value
Berkus	£1,500,000
Scorecard	£2,093,000
VC method	£2,272,060
Blended	£1,955,020

Frequently asked questions

Is a pre-revenue valuation the same as the amount raised?

No. A valuation is a negotiated opening figure, while the amount raised depends on the deal. SEIS companies can raise at most £250,000 and must have gross assets not over £350,000.

Why blend Berkus, scorecard and VC method?

Each method looks at a different angle: qualitative readiness, comparison with similar startups, and exit upside. Using them together gives a more rounded view than any single method.

Does the VC method include future dilution?

No. The simple model ignores future dilution and future investment requirements, so it should be read as a starting estimate.

Are the BorePro figures real company data?

No. All BorePro data in the guide is fictional and illustrative, so it is useful for showing the arithmetic rather than as market evidence.

Should founders treat the blended number as final?

No. The valuation is the opening of a negotiation, backed by evidence, and investors are put off by unrealistic valuations. Readers should check HMRC guidance or take advice where tax matters arise.

Sources

Figures and prices were checked on 2 November 2026; check the linked sources before relying on them. This article is general information, not tax, legal or investment advice.