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The Scorecard Pre-Money Valuation Method For Pre-Revenue Startups

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The pre-money valuation of a startup is the bedrock of company worth. Yet, the look of uncertainty and terror on an entrepreneur’s and Angel’s face when it comes to valuing a startup is not unfounded.

An adequate valuation for a long standing cash cow with overflowing EBITDA isn’t easy to do, far more for a pre-revenue startup built on a great idea and mainly sweat equity. The riddle of the Sphinx may be easier to solve in many cases! We are not going to examine unicorns in this instance. What we shall now do is provide a simple framework for understanding how to find a comfortable ballpark valuation for a pre-revenue startup with strong growth potential using both industry data and weighted percentages via the Scorecard Valuation Method.

The Scorecard Valuation methodology was fully developed by Bill Payne, the Angel Capital Association’s 2009 US Angel Investor of the Year, with full details presented in his book, The Definitive Guide to Raising Money from Angels. The Ohio TechAngels swear by this methodology, renaming the method the Bill Payne valuation method. Other Angels in the industry refer to this method as the Benchmark Method. I personally like this method. Usually for pre-revenue startups we work with projections based mainly on industry figures, projected sales and do a quick and dirty valuation of 2x sales over three years. This works in cases where industry sales trends are very much the norm. However, the Scorecard Methodology introduces individual weighted percentages based on a detailed number of quantitative and qualitative factors per categories, which really assist to encompass the nitty-gritty worth of the startup at inception.

#1 Finding The Average Industry Pre-Money Valuation

It may be possible to get this information from the Angel Capital Association with some investigating, but there is satisfaction in building your own model! In Bill Payne’s example, he surveyed 13 top Angel Associations in the US in 2010 for their portfolio pre-money valuation statistics for pre-revenue startups, which turned out to be:

The Scorecard Pre-Money Valuation Method For Pre-Revenue Startups Explained

Remember, these were not portfolios filled with unicorn startups, so the outliers didn’t skew the numbers significantly. This is a great step for an Angel investor. An entrepreneur might be gun shy in contacting all these Angel groups, so I strongly suggest going to, CrunchBase, or AngelList, go to the top 10 competitors in the industry and possibly geography, find their pre-money valuations and then find the average to use as the industry pre-money valuation. For this example, let’s say that the pre-revenue startup has an industry pre-money valuation of US$1.5 million.

#2 Determining The Individual Weighted Averages

We shall do this according to the following criteria:

  • Strength of the Management Team: 0-30%
    • o Is the team complete? Experienced? Coachable?
  • Size of the Opportunity: 0-25%
    • Quantifiable target market $
  • Product/Technology: 0-15%
    • IP well defined? Traction?
  • Competitive Environment: 0-10%
    • Barriers to entry?
  • Marketing/Sales Channels/Partnerships: 0-10%
    • Key beta testers? Key partners?
  • Need for Additional Investment: 0 – 5%
    • Angel? VC?
  • Other: 0 – 5%
    • Geographical factors?

The actual valuation worksheet is extensive, but here we get the general idea of how to weight the pre-revenue startup. As we see, “Strength of the Management Team” is and will always be the most important factor in valuing a startup (and any company)!

#3 Assigning Comparison Factors To The Percentage Weights

In this example let us say this is the winning pre-revenue startup, so we assign the maximum percentage weights. We then need to add a business sector comparison percentage. This part is a bit tricky and calls for strong sector research. Let’s surmise that the company is in a sector that usually has a strong team background, but the company surpasses the sector in product technology. In this case, we will assign 100% comparison to strong team background, and 150% to product technology. Here is a table similar to what Bill Payne provided for clarity:

The Scorecard Pre-Money Valuation Method For Pre-Revenue Startups Explained

#4 Multiplying The Sum Of The Factors

For the final step, we multiply the sum of the factors, 1.1300, by the average industry pre-money valuation in step one, US$1.5 million, to get our own company pre-money valuation. Here, we have a pre-money valuation of US$1.7 million dollars! Not too shabby.

So many entrepreneurs and seed capital investors tend to be lost at sea when it comes to understanding startup valuations. And with the advent of unicorns, the process became even more confounding! Bill Payne’s Scorecard Valuation Method helps greatly with obtaining a ballpark valuation for pre-revenue startups, with good industry and sector research, and a very introspective and honest understanding of one’s own startup objectives.

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An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

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Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

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A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

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A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

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A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

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A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

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