How to value a pre-revenue startup (UK, 2026)

A pre-revenue valuation is an opinion you have to defend

With no revenue, there is no earnings multiple to apply. Any valuation you give is an opinion about the future, and an investor will weigh it against their own opinion. Your job is to bring a number you can defend and a range you can live with.

I'd treat valuation as the output of three things: what comparable companies raised at, what your team and traction justify, and how much of the company you are willing to sell. Founders who start from the third one usually get to a better answer, because it forces you to work back from the money you need.

This is general information, not legal or tax advice.

Start with the ownership you want to keep

Decide how much of the company you can sell in this round and still be comfortable. Then work out how much money you need to reach your next milestone. Divide one by the other and you have an implied valuation.

The arithmetic is simple. If an investor puts in £500,000 and the company is valued at £2 million before the investment, the investor owns 20% afterwards. The £2 million is the pre-money valuation and the £2.5 million total is the post-money. Say which one you mean every time you quote a figure.

The Berkus method

The Berkus method gives a monetary value to five parts of your business: the idea, the prototype, the quality of the team, strategic relationships, and product rollout or early sales. You add the values together. The Development Bank of Wales explains the method and suggests the maximum for any one aspect should be no more than £250k.

It suits a company with a clear idea and an early prototype, where nothing else is available to measure. Its weakness is that you choose the numbers. I'd use it as a sense check and show the reasoning for each of the five scores, because an investor will challenge them one at a time.

The scorecard method

The scorecard method scores your company against the typical company in your region and stage on factors such as the team, the size of the market and the technology. Each factor gets a weight, and the combined score moves a baseline valuation up or down.

The Development Bank of Wales gives a simple example in which a score of 7 out of 10 equates to £700k if a 10 out of 10 is worth £1m. Standard Ledger's UK guide shows the weighted version. In both cases the baseline matters most, so ask what comparable seed companies in your sector have raised at before you start scoring.

Comparables and the risk factor method

Market comparables look at what similar companies raised at in recent rounds. This is the method investors lean on most, because it reflects what the market is paying now. The difficulty is finding rounds that are similar enough to yours. Check sector, stage, location and the date of the deal, since terms from a few years ago may not hold.

The risk factor summation method starts from a baseline and adjusts it up or down for a set of risks, such as management, competition and funding. The Development Bank of Wales notes the logic behind it: investors expect roughly one in ten investments to be a big success and several to return nothing. That portfolio view explains why angels push valuations down on early risk.

Triangulate, then pick a range

Standard Ledger advises using all three main methods and triangulating. I agree. If Berkus, the scorecard and your comparables all land in a similar band, you have a defensible range. If they are far apart, find out why before you talk to investors.

Go into meetings with a range and a reason for each end of it. A single fixed number invites a flat yes or no, while a range with reasoning invites a conversation about what would move you up the range.

Write the reasoning down in one page before the first meeting. List the comparable rounds you used, the score you gave each factor and the assumptions behind them. When an investor pushes back, you can discuss a specific assumption and avoid defending a single figure.

Know the market you are pricing into

The British Business Bank's Small Business Equity Tracker 2026 reports £12.3 billion invested across 2,002 deals in smaller UK businesses in 2025, with deal numbers down 17% on 2024. Seed deal numbers fell by 27%. Fewer deals usually mean investors have more choice, so expect questions about your numbers.

The same report shows the market is concentrated. AI companies took 44% of total investment, and London accounted for 57% of investment value and 48% of deals. If you are outside London or outside AI, you can still raise, but you may need to be more precise about why your market is large.

Let SEIS and EIS shape the round size

Most UK angels look for tax relief. Under SEIS, a company can receive a maximum of £250,000, must have gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued, and its qualifying trade must be no more than three years old. Investors get 50% income tax relief on up to £200,000 a year.

The Enterprise Investment Scheme covers later or larger rounds. Since 6 April 2026 the limit for most companies is £10 million in any 12 months and £24 million over the company's life, and the company must be within seven years of its first commercial sale. EIS income tax relief is 30% on up to £1 million a year, or £2 million if at least £1 million goes into knowledge-intensive companies. Matching your valuation to a round that fits these limits keeps your investor pool wide.

Avoid the common mistakes

Do not anchor on a valuation you saw in a headline. Those deals are rarely like yours. Do not push the number to the maximum either. A high valuation now can make the next round hard if you have not grown into it, and a down round hurts everyone at the table.

I'd also keep the valuation conversation separate from the terms conversation. A good headline price with heavy investor protections can leave you worse off than a lower price with clean terms. We built InvestorUniverse so founders can find investors whose stage, sector and cheque size already match the round they are pricing, which makes the valuation conversation shorter.

Keep your own notes on what each investor says about valuation. Patterns show up quickly. If three investors in a row say the same thing about your market size or your team, treat it as information, and adjust your range or your story before the next batch of meetings.