Valuations, Reality Checks, and the Road Ahead for Startups

One of the biggest hurdles startups face when fundraising at the Seed or Series A stage? Not planning for the reality check.

A sky-high valuation might feel great during an early raise, but it can backfire when it's time for the next round. Investors at later stages, like Series A or Seed+, are increasingly scrutinizing valuations through the lens of revenue multiples.

Here’s what I think about when evaluating startups:

1️⃣ Is the valuation aligned with traction, not hype?

2️⃣ Does the startup have a clear path to raising its next two rounds based on growth and fundamentals?

3️⃣ Are they in a position to triple revenue year over year, or at least achieve a 10x revenue multiple in a reasonable time frame?

For pre-revenue startups, moderate valuations (around $10M post-money or below) often leave room to grow. Pushing too far beyond that, without significant ARR or moonshot potential, can make future raises challenging.

The harsh truth? If revenue growth doesn’t catch up with valuation, tough times often follow — down rounds, flat rounds, or even shutdowns.

The companies I admire most are the ones that focus on fundamentals. They raise at modest valuations, deliver strong revenue growth, and build a business people love. Valuation becomes a byproduct of their success, not the driving force.

My advice for founders: Stick to fundamentals, build something people will pay for, and let growth drive valuation—not the other way around.

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