There are several methodologies for valuing an early stage startup at the pre-revenue and nominal revenue stages. These valuations are needed for funding rounds at the pre-seed, seed and series A, series B, and beyond stages.

Most venture capital funds or VC funds, we'll deploy multiple methods that draw on evaluating both qualitative and quantitative factors. For a startup company, establishing a pre-money valuation for a pre-seed or seed stage company can be a challenge because the company may not even have started selling a product referred to as being pre-revenue.

In order to be able to raise capital, the product must have reached the minimum viable product stage or MVP. I.e., the product must have enough features to attract early adopter customers. As a result, standard corporate finance valuation techniques such as earnings multiples or a discounted cash flow can't be used. This means that any assessment of value is driven by more qualitative factors, requiring the investor to have a sense for the quality of the management or the potential scale of the product's target market. And so the importance of the detailed valuation calculation is relatively low.