What should founders say when investors ask about valuation?
An experienced VC’s framework for discussing valuation, reading investor signals, and negotiating without naming a price too early.
👋 Hey, Sahil here - welcome to this edition of Venture Curator, where we break down how great startups grow, how top investors think, and what’s shaping the future of tech.
P.S. Get access to 100+ startup & VC resources, investor databases, fundraising templates, 150+ premium archive posts and exclusive startup research - all in one place.
What should founders say when investors ask about valuation?
[A few weeks back, I had a call with an investor who has a decade of experience investing in startups globally as a VC (let’s call them Investor-A). We discussed how founders can approach the topic of valuation when investors ask. I thought I’d share a framework with you to tackle this question!]
One of the hardest things about the fundraising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.”
VC firms see thousands of deals and have a refined sense of how the market values them because they receive price signals across these deals.
As an entrepreneur, it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.
Of course, unlike cars, there is no direct comparison across each startup, so these are just some general guidelines to try to even the information field. So, grab your coffee and let’s deep dive into it.
What expectations do you have about valuation?
It is not uncommon for a VC to ask about your price expectations in this fundraising process.
It’s a legitimate question, as the VC is in “price discovery” mode and wants a sense of whether you’re within their valuation range.
It’s a tough dance, but here is what Investor-A suggest:
(Subscribe to Venture Curator Premium and get 15% off forever.)