Valuing a seed-stage company is not about “guessing” what it is worth, but about agreeing on a reasonable entry price today, knowing that the real value will be demonstrated through the milestones of the next 12 to 18 months. The problem is clear: there is no stable income statement yet, the product may still be in iteration, and projections may be promising but insufficient to extrapolate from. For this reason, a sensible seed valuation relies less on accounting history and more on the logic of risk, milestones, and comparables.
The first realistic approach is that of ranges based on maturity and milestones. At seed stage, valuations typically move within bands depending on whether there is a ready product, first customers, repeat purchases, a validated channel, or signed commercial agreements. The technical key here is to turn the conversation into a map of verifiable milestones: what needs to happen for the next funding round to take place at a higher valuation, and what metrics or evidence support it. This brings order to the negotiation, because today’s price is tied to concrete deliverables rather than general expectations.
The second method, very useful for grounding numbers, is the venture capital approach based on exit value. It starts from a plausible exit value in 4 to 7 years and the return required by the investor, and calculates what ownership percentage is needed for the investment to “add up”. A simple example: it is estimated that, if everything goes well, the company could be sold for €20 million in 5 years. The investor wants to multiply their investment by 10 and contributes €500,000. For €500,000 to become €5,000,000 at exit, they would need approximately 25% of the company in that scenario (25% of €20 million is €5 million). If it is agreed that their stake will be 20%, the investor will tend to adjust the amount, the valuation, or the structure, because the risk-return ratio no longer works out.
The third approach is that of comparables, but used properly. At seed stage, it is not useful to compare with listed companies, but rather with recent funding rounds of similar companies in terms of sector, country, technological complexity, and level of traction. A comparable does not give you “the” valuation — it gives you a range and, above all, a common reference point to justify why your case sits above or below the average. Technically, the most important thing is to compare like with like: similar product, similar channel, similar customer volume, and equivalent risks.
At seed stage, a good valuation is not the highest one, but the one that makes it possible to fund the plan, leaves room for future rounds without excessive dilution, and aligns incentives between the team and the investor, with clear milestones to support subsequent appreciation in value.
Having personalised support, such as that offered by the Economic Office of Galicia, can be key to a successful implementation. Apply for free specialist advice and make the most of the available resources to drive your business forward.
