The simplest rule of thumb to determine the value of a startup company was developed by Jürgen Meier, a former manager of the Novartis Venture Fund.

In this regard, the company value is determined exclusively by the quality and experience of the founding team. For each team member shall be assumed a contribution to the company value of one million euros. Other criteria are not considered.

Example:

If the founding team of a start-up company consists of three members with appropriate business and industry skills that work together smoothly and optimally supplement each other and, at the best, have demonstrated in common projects of the past, the value of the start-up is estimated at 3 million euros.

Source:  Andreas Anderheggen, Marketingplanung und Unternehmensbewertung im Businessplan für Unternehmensgründungen: Zusammenhänge, Academic Paper at the University of Zurich, Switzerland; Munich 2003, published on grin.com.

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Before you get the idea to set up a startup company with as many team members as possible, in order to increase its value, we must disappoint you. We consider this rule of thumb not suitable for determing the value of your company.

According to surveys among high-tech start-up entrepreneurs financed by business angels, their financial contribution is between 100,000 and 150,000 euros. Therefore they receive company shares between 15 and 30%.
It seems that a startup valuation of one million euros is less an objective standard than a justification for an investment of such a magnitude. On the other hand, it could be added that even more detailed methods may not be better suited as such an objective benchmark.

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