Valuing a company in the seed stage is not about “guessing a number,” but about agreeing on a reasonable range that reflects risk, potential, and execution capability at a time when there is no historical record to dictate the rules. At this stage, valuation does not resemble that of a mature company: it is not a consolidated track record that is valued, but a hypothesis supported by partial evidence.
The first step is to understand the objectives of both parties. The founder seeks to minimize dilution and finance strategic milestones, while the investor needs to enter at a price that compensates for the risk assumed and allows for an attractive return if the business plan is met.
Valuation Methodologies:
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Stage-based Comparables: This is not about copying press headlines, but about analyzing similar operations in the same context: sector, model type (software, scalable services, product), and traction level. The practical variable is usually the round size, the percentage of equity ceded, and the standard pre-money valuation ranges in the market. This approach serves to “bracket” the value, as the seed phase follows certain patterns, with typical dilutions ranging between 10% and 25%.
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Risk Factor Summation Approach: This method starts from an “ideal” valuation and applies discounts for risks that remain open: product, market, channel, team, regulation, or dependence on third parties. It does not require complex formulas, but honesty. If the product is not yet proven or there are no recurring sales, the discount must be real. This explains why two projects with the same idea can have very different valuations.
The Long-term Vision: Dilution and Subsequent Rounds
A fundamental criterion for realism is observing dilution and the next step. A valuation is not “good” if it blocks your options in a subsequent round. If in the seed phase you value yourself so high that in 12 or 18 months you cannot justify a reasonable jump in value, the next round will become seriously complicated. Conversely, if the valuation is too low, you will lose control of the company prematurely.
The healthiest approach is one that allows clear milestones to be financed, maintains an acceptable dilution for the founders, and leaves room for the project to demonstrate, with data and metrics, that it is worth more in the next investment stretch.
Having personalized support, such as that offered by the Economic Office of Galicia, can be key to successful implementation. Request free specialized advice and take advantage of the available resources to boost your business.
