Tips on Company Valuation

I ordinarily have relatively little tolerance for Guy Kawasaki’s musings, but I have had three different venture capital folks trot out his company valuation “rule” lately. It is Guy’s cynical heuristic for concocting a pre-money number — what your company is worth before you put in outside money — for an early-stage company in 2004:

Kawasaki’s Law of Pre-Money Valuation: For every full-time engineer, add $500,000; for every full-time M.B.A., subtract $250,000.