Where is the value in a startup?

Posted on Posted in Investing, Mentoring

I’ve written many articles on the woes of overvalued startups and why yours isn’t worth £1M.

So where is the value in your company?

Below are the main areas of value that a startup can influence within their own company.

  1. IP, ideally in the form of patents, ideally granted. Patent values increase dramatically when contested and even more when successfully defended. Valid offers to purchase the patent(s) increase value to the value of the offer amount.
  2. Proposition. A strong cohesive idea of the market you will be entering. Creating a compelling reasoned argument why users will want to use their product or service.
  3. If possible, a Minimum Viable Product, some kind of demonstration of the technology or service that investors can interact with.
  4. Capital. Founders investing their own capital is a huge sign of commitment and increases valuation significantly.
  5. Formalised partnerships with industry.
  6. Genuine interest from potential customers, ideally in the form of a contract, but letters of intent hold some value.
  7. Strong co-founders bring a huge value add, especially when they have diverse and relevant areas of expertise.

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