Simulation of the early-stage valuation
How much a startup that does not sell yet is worth.
An early-stage startup cannot be valued by its revenue, because it has none, nor by its share capital, which is only the nominal value of its shares. The Berkus method, from 1990 and updated by its author twenty years later, values what does exist: how much risk has already been taken off the table on five fronts. Choose the zone, move the five handles and read the pre-money valuation; add what an investor contributes and read their stake. Indicative and not binding: the price is set by the negotiation.
To read this page: how much each phase of the path is worth · the risk and reward map · the simulation of the private investment.
The method
Five risks, five values.
Berkus assigns each front a value from zero to a maximum, according to what the startup has demonstrated. The maximum per front is 20% of the maximum pre-money valuation that the market in your zone pays for an excellent pre-seed startup. In the original version it was 500,000 dollars per front; today Berkus himself puts it between 1 and 3 million in the most expensive markets. The database of maximums by zone is ours: it cross-references 2024 and 2025 reports (Carta, Dealroom, Atomico, MAGNiTT, LAVCA, Partech and others) and is declared at the foot.
Forty markets in ten macro-areas; the maximum is what the market pays for an excellent pre-seed startup, and each of the five fronts is worth up to a fifth of it.
Real problem, sufficient market, sustainable business model. Reduces the basic risk. On the path: F1 to F3 · capture, analysis, ideation.
Working prototype or MVP tested with real users. Reduces the technological risk. On the path: F5 to F7 · proof, prototype, MVP.
Experience, technical skills, execution capacity and complementarity. Reduces the execution risk. On the path: transversal · who guides each phase.
Alliances, advisors, key customers or suppliers. Reduces the market risk. On the path: F4 and F8 · concept and traction.
First users, first customers, first revenue. Reduces the production and commercialisation risk. On the path: F8 · traction.
Valuation of the startup
- pre-money valuation, Berkus method
Post-money = pre-money + contribution; stake = contribution ÷ post-money. Shares are issued with a premium: the nominal share capital does not change the split.
Maximums by zone: own database (2024-2025), USD converted to EUR at the 2024 average rate; in zones with fragmented data, triangulation of sources. Method: Berkus (1990) and its 2016 update. Indicative and not binding: the price is set by founders and investors.
What the method does not see
The patent, the sector and the path.
Intellectual property. Berkus has no front for the patent. And a patent is worth three things that are neither the time nor the cost it took: the market it protects, the breadth and defensibility of its claims, and the real capacity to enforce them. Add it separately, with those three criteria, and declare how.
The sector. In artificial intelligence, biotechnology or deep tech, pre-seed valuations are higher and the maximums per front rise; the method allows for it. No sector factor is applied here because we have no datum to support it: when we have one, it will come in as a handle.
The path. Berkus's five fronts are five risks, and the Volcano path removes them in order: the sound idea is built in F1 to F3, the prototype in F5 to F7, the first sales in F8. That is why the value line of the diagram rises stretch by stretch: each gate crossed is a Berkus front that stops being worth zero. And that is why value concentrates at the base, in understanding the problem, before a product exists: the TRL pyramid.
John F. Kennedy, 1962