How we calculate startup valuation
We use the multiples method: annual recurring revenue multiplied by a factor reflecting growth and stage. It's a negotiation reference, not an appraisal.
Use the Startup Valuation CalculatorFormula
annual revenue = monthly revenue × 12
valuation = annual revenue × multiple
Variables
- monthly revenue
- Recurring revenue from the most recent month.
- growth
- Growth pace that adjusts the applied multiple.
- multiple
- Market factor; fast-growing startups receive higher multiples.
Step-by-step calculation
- We annualize the monthly revenue entered.
- We select the multiple that matches the growth pace.
- We multiply to get the estimated valuation range.
Worked example
Inputs
- Monthly revenue: $25,000
- Fast growth (8× multiple)
Calculation
annual revenue = 300,000
300,000 × 8
Estimated valuation of $2.4 million.
Common mistakes
- Treating the estimate as an actual market value — real rounds depend on team, market, and negotiation.
- Using non-recurring revenue as the basis for the multiple.
Frequently asked questions
Do investors actually use this method?
They use it as a starting point, alongside discounted cash flow and industry comparables.
All values are in US dollars (US$). Results are estimates and do not replace professional advice.