Determining a valuation for your crypto protocol/company is hard:

Here's how I started explaining the market environment to founders.

Bookmark this if your at Pre-Seed to Series A
Brought to you by @NFTomics Venture Capital Investor/Occasional Threader.

Follow my substack:
{How do I value my project}

This is a question I often get asked by early-stage founders, and I understand.

> Low valuations impact cap tables for future fundraising rounds

> High valuations can put investors off or lead to 'down rounds' in the future

{Considerations Pre-Seed}

πŸ‘‰πŸΌ If you're super early to fundraising here is your guide

πŸ‘‰πŸΌ Remember it's typical to give away up to 20% of your project to VCs - quick math - you need $1m in funds - so you have to target a $5m valuation
{Considerations Series A}

πŸ‘‰πŸΌ Cap table structure: Founding teams should have a minimum of 50% equity by their series A.

πŸ‘‰πŸΌ Modeling the dilution of future investment rounds vs how much $$ you'll need will help you view how much dilution you can afford to take on each round.
{Considerations Series A}

πŸ‘‰πŸΌ For your next round (Series A) with a robust capital allocation plan + data from burn over the last two years, you can take the target raise amount, apply an additional dilution range of 15% - 25%, and land on a valuation.

{Exit Considerations}

πŸ‘‰πŸΌ Calculating potential exit multiples in a specific sector or vertical can be done by researching enterprise value-to-revenue (EV/R) multiples.

πŸ‘‰πŸΌ EV/R is a measure of the value of a stock that compares a company's enterprise value to its revenue.
{Exit Considerations}

πŸ‘‰πŸΌUnderstanding these multiples allows a you to consider the exit potential of your start-up

πŸ‘‰πŸΌThis help you think about how much equity you/ investors would need to achieve your target return.

(I'm comfortable w/ $3m & I own 10% so $30m exit @ 6x EV/R)
{Bonus Materials}

Footnote Sources: Peter Walker, LDN Anon

Bonus: Who to approach when trying to raiseπŸ‘‡

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