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The Berkus Method- Valuing the Early Stage Investment
The Updated Berkus Method for Early Stage Startup Financial Valuation
The method was originally created in the 1990’s, but when published by Harvard’s Amis and Stevenson in 2001 in the book “Winning Angels,” it was developed to then become known as “The Berkus Method.”
It is widely known that a large majority of start ups fail to meet their planned revenues in the time periods planned. Therefore, Dave asked himself why start-ups continue to use financial projections as valuation metrics when the chances of these being reliable future predictions are so slim?
He thought that a better way to value a start-up is to give value to those elements of progress by the entrepreneur or the employees that make success more likely.
After awarding credit of some basic value to the entrepreneur for the original idea, The Berkus Method assigns a financial valuation to each major risky element of business that young companies encounter.
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