How ValuMate calculates a valuation

This guide explains the fields in a detailed web report. A valuation is a directional pre-money opinion, not an audited appraisal, investment offer, or guaranteed transaction price. Every report keeps the methodology version used at the time.

Market size: TAM, SAM and SOM

TAM (Total Addressable Market) is annual revenue if all relevant buyers in the defined market purchased. SAM (Serviceable Addressable Market) narrows TAM to buyers in geographies, eligibility groups and use cases the current business can actually serve. SOM (Serviceable Obtainable Market) is a plausible annual share of SAM won over the next three to five years.

Annual revenue per customer = yearly payments x typical payment value x revenue capture percentage. TAM = potential buyers x annual revenue per customer. SAM = TAM x geography share x buyer eligibility share x current-product coverage. SOM = SAM x attainable share.

Revenue capture is 100% for direct sales, but only the retained commission or fee for a marketplace. Apply each narrowing percentage once, and avoid double-counting excluded customers. Sources should name the publisher, year, geography, customer definition and any calculation. Founders can choose Enter my totals, Help me calculate or an 11-step Market interview. Their choice appears in the web report.

Lifecycle stage and methods

Stage detection compares the founder's claim with revenue and traction evidence. A method is skipped when its stage or required evidence does not fit. Only methods that complete receive weight.

Berkus

Five early-stage risk-reduction factors are scored from 0 to 1: idea, prototype, team, relationships and sales/rollout. Each can contribute up to USD 500,000; total value is capped at USD 2.5 million. It is not a late-stage earnings method.

Scorecard

An industry/stage peer median is adjusted by six factor multipliers: team (30%), market size (25%), product/technology (15%), competition (10%), relationships (10%) and funding need (10%). A multiplier of 1.0 matches the baseline; lower or higher values indicate relative weakness or strength.

Venture capital method

Projected exit revenue is multiplied by an exit revenue multiple. The exit value is divided by the required investor return multiple for today's post-money value. The investment amount is then subtracted for an estimated pre-money value. The result is highly sensitive to exit assumptions and can reach a zero floor.

Discounted cash flow (DCF)

Five years of projected free cash flow are discounted to present value. A terminal value estimates later cash flows using a long-run growth rate lower than the discount rate. High terminal-value dependence is flagged because small assumption changes can move the value substantially. DCF requires meaningful revenue or projections.

Comparables and revenue multiples

Relevant public-company enterprise-value-to-revenue multiples are applied to startup revenue. Public peers often differ in scale, liquidity and risk. A fallback industry average may be used and identified when live data is unavailable. Revenue multiples provide a separate growth-adjusted cross-check.

Blending, confidence and sensitivity

AI may suggest qualitative scores, projections and method weights. Validated deterministic code performs the arithmetic. Only completed methods are weighted; weights are constrained by lifecycle stage and normalized to 100%. External traction evidence may adjust the weighted result with a bounded multiplier after blending.

The confidence score (0-100) combines data completeness, count of applicable completed methods, external validation, and alignment between claimed stage and evidence. It reflects support for the estimate, not the probability of funding. The valuation range widens as confidence falls, from roughly +/-15% at the strongest band to +/-60% at the weakest.

Sensitivity scenarios change one key assumption at a time, such as revenue or discount rate, and recalculate affected methods. They show uncertainty rather than forecast actual outcomes.

Reading your report

Method detail rows show inputs, component factors, the method result and the weight applied. A zero result can follow from a conservative assumption or a funding ask greater than projected post-money value. Data-quality warnings explain missing or inconsistent evidence. Paid full reports include the complete analysis and a downloadable PDF; free snapshots show only a concise value, range and confidence.

Questions: reachout@valumate.site.