How to Talk Valuation Numbers with Investors – The Only Guide You Need. | VC & Startup Jobs.
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👋 Hey Sahil here! Welcome to this bi-weekly venture curator newsletter—where we dive into the world of startups, growth, product building, and venture capital. In today’s newsletter -
Deep Dive: How to Talk About Valuation Numbers When Investors Ask?
Quick Dive:
Do Early-Stage Startups Need a Financial Model For Fundraising?
The Marketing Framework ClickUp Used to Scale to a $4B Company.
20+ VC & Startups job opportunities.
📬 VENTURE CURATORS’ FINDING
My favourite finds of the week.
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Paul Graham’s rule of thumb for when to launch your product.
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350+ Indian Angel Investors & Venture Capital Firms Contact Database (Email + LinkedIn Link).
Personal finance things to know as a founder.
All-In-One guide to Venture Capital interview questions (and how to answer them)
How Duolingo works: 14 years of big learnings in one little handbook.
Shaan Puri's triangle of talent.
2700+ US angel investors & VC firms contact database (Email + LinkedIn Link).
17 contrarian takes on startups and venture capital.
Early stage startup financial model template for fundraising, simply put your numbers and get right financial model.
For AI enthusiasts: Must-have resources to stay updated on AI tools, trusted by MIT students and tech professionals from OpenAI and NVIDIA.
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📜 TODAY’S DEEP DIVE
How to Talk About Valuation Numbers When Investors Ask?
One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.”
VC firms see thousands of deals and have a refined sense of how the market is valuing deals because they get price signals across all of these deals.
As an entrepreneur, it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.
Of course, unlike cars, there is no direct comparison across each startup so these are just some general guidelines to try and even the information field. So, grab your coffee and let’s deep dive into it.
What Expectations Do You Have About Valuation?
It is not uncommon for a VC to ask about your price expectations in this fundraising process. It’s a legitimate question as the VC is in “price discovery” mode and wants a sense of whether you’re in his or her valuation range.
It’s a tough dance but, here is what Investor-A suggest:
In most cases don’t name an actual price
Your job is to “anchor” by giving the VC a general range without saying it. Call this “price signalling.”
Turn the tables on the VC by politely saying, “Given you must have a sense of our general valuation, how do you feel the market is pricing rounds like ours these days? After all — we only raise once every 1–2 years!”
Why shouldn’t most founders just name a price? For starters, it’s the job of the “buyer” to name a price and you don’t want to name your valuation if it ends up being lower than the VC would have paid or a price too high that the VC simply pulls out of the process.
So Then Why Anchor?
If you don’t give signals to a VC of what your general expectations are it’s hard for them to know whether you have realistic expectations relative to their perceived value of you and whether you want to keep them in the process rather than just having them pull out based on what they THINK you might want on valuation.
Any great negotiation starts by anchoring the other party’s expectations and then testing their reaction.
How you talk about valuation will of course depend on how well your business is performing and how much demand you have from other investors. If I leave out the immediate “up and to the right” companies and talk about most others who have made good progress since the last funding but the next round isn’t a slam dunk, you might consider something like if asked about your expectations:
We closed our last round at a $17 million post-money valuation and we had raised $3.5 million.
We closed it 20 months ago and we feel like we’ve made great progress
We’re hoping to raise $5–7 million in this round
We know roughly how VCs price rounds and we think we’ll likely be within the normal range of expectations
But obviously, we’re going to let the market tell us what the right valuation is. We only raise every 2 years so the market will have a better feel for it than we will
We’re optimizing for the best long-term fit for a VC and who we think will help us create the most value. We’re not optimizing for the highest price. But obviously, we want a fair price.
How do you generally think about valuation for a company at our stage? (this is seeking feedback / testing your response)
Here you’ve set a bunch of signals without naming your price. What a VC heard was:
The price has to be higher than $17 million, which was the last round. It was 20 months ago and the founder told me she has made great progress (code words for the higher price expected)
She is raising $5–7 million and knows the range of valuations for this amount. If I assume 20–25% dilution that implies a price of between $20–28 million pre-money valuation ($25-$35m post-money). Maybe she wants slightly higher but she certainly won’t want lower.
She has told me she’s not trying to shop this for the highest price. I’m not so naive as to completely believe that — every entrepreneur will go for the highest reasonable price with a VC they like so I at least need to put my best foot forward. But if I’m in the ballpark of fair she won’t game me and push for the highest price as the only part of her decision.
What Was The Post Money On Your Last Round And How Much Capital Have You Raised?
It’s not uncommon for a VC to ask you how much capital you’ve raised and what the post-money valuation was on your last round.
I know that some founders feel uncomfortable with this as though they might somehow be sharing something so confidential that it ultimately hurts you. These are straightforward questions, the answers will have no bearing on your ultimate success and if you want to know the truth most VCs have access to databases like Pitchbook that have all of this information anyway.
So Why Does A VC Ask You?
In the first place, they’re looking for “fit” with their firm. If you’re talking with a typical Seed/A/B round firm they often have ownership targets in the company in which they invest. Since they have limited capital and limited time availability they often try to make concentrated investments across companies in which they have the highest conviction.
If a firm typically invests $5 million in its first check and its target is to own 20% or more that means that most of its deals are in the $15–20 million pre-money range. If you’re raising at $40 million pre then you might be out of their strike zone.
Many VCs will have a distribution curve where they’ll do a small number of early-stage deals (say $1.5–3 million invested at a $6–10m pre-money), a larger number of “down the fairway” deals ($4–5 million at a $15–25 million pre) and a few later-stage deals (say $8–10 million at a $30–40 million pre).
Of course, there are smaller funds that are more price sensitive and want to invest earlier and later stage funds with more capital to deploy and write larger checks a higher prices so understanding what is that VC’s “norm” is important.
A second thing a VC may be trying to determine is whether your last-round valuation was significantly over-priced.
Of course, valuation is in the eye of the beholder but if that VC thinks your last round valuation was way too high then he or she is more likely to politely pass rather than try and talk down your valuation now.
VCs hate down rounds and many don’t even like “flat rounds.” There are some simple reasons. For starters, VCs don’t like to piss off a bunch of your previous-round VCs because they’ll likely have to work with them in other deals. They also don’t want to become a shareholder in a company where every other shareholder starts by being annoyed with them.
But there is also another very rational reason. If a VC prices a flat or down round it means that management teams are often taking too much dilution. Every VC knows that talented founders or executives who don’t own enough of the company or perceive they will have enough upside will eventually start thinking about their next company and are less likely to stick around. So a VC doesn’t want to price a deal in which the founder feels aggrieved from day one but takes your money anyway because he or she doesn’t have a choice.
Every VC has a story where they did the flat round anyway and the founder said,
“I don’t mind! I know our last round valuation was too high.”
In nearly 100% of those cases, the founder expresses his or her frustration a year later (and 2 years later and 4 years later). The memory isn’t “Boy, you stepped in at a time when we were having a tough time getting other VCs to see the value in our company — thank you!” it is more likely a softer version of “You took advantage of us when we had no other options.”
It is this muscle memory that makes the VC want to pass on the next down or flat round. In a market where there is always another great deal to evaluate, why sign up for one where you know there are going to be bruised egos from the get-go?
The “How much have you raised?” The question is usually a VC trying to determine whether you’ve been capital-efficient with the funds you’ve raised to date. If you’ve raised large amounts of money and can’t show much progress you’ve got a tougher time to explain the past than if you’ve been frugal and over-achieved.
Investor’s advice to founders on the questions of “How much did you raise in the last round?” and “What was the post-money valuation of your last round?” -
is to start with just the data. If you don’t perceive that you have any potential “issues” (raised too much, price too high) then this should be a non-event. If you are aware you may have some issues or if you are constantly getting feedback that you may have issues then it’s a smart strategy for you to develop a set of talking points to get in front of the issue when asked.
Are Your Existing Investors Participating In This Round?
This is a delicate dance as well. Each new investor knows that the people who have the MOST asymmetric information on your performance are the previous round investors. They not only know all of your data and how you’re doing relative to the competition, but they also have a good view of how well your management team is performing together and whether you’re a good leader.
On the one hand, a new potential investor will want to know that your existing investors are willing to continue to invest heavily in this round and at the same price that they are paying, on the other hand, they want to invest enough of the round to hit their ownership targets and may not want existing investors to take their full pro-rata investments.
Before raising capital you need to have a conversation with your existing investors to get a sense of what they’re thinking or at a minimum you better have an intuitive feel for it. Assuming that most of your existing investors are supportive but want a new outside lead, Investor-A recommends answering this something like this:
Our existing investors of course want to participate in this round. They will likely want to do their pro rata investments — some might even want slightly more.
I know that new firms have ownership targets. I feel confident I can meet these. If it becomes sensitive between a new investor’s needs and previous investors — I’m not going to tell my investors they can’t participate but I feel confident I can work with them to keep the sizes of their checks reasonable.
What a VC hears when you say this:
My existing investors are supportive. I will eventually call them anyway to confirm but I can continue my investment assuming they are supportive
In the future, if we raise a larger round this entrepreneur won’t try to screw me by forcing me not to take my pro rata rights because they weren’t throwing existing investors under the bus with me
This entrepreneur is sophisticated enough to know that fund-raising is a dance in which I need to meet the needs of both new investors and previous investors. They will work with me so I can get close to my ownership targets.
When SHOULD You Name A Valuation Expectation?
There are some types of rounds where just naming price might be a better option.
Strategics (ie industry investors vs. VCs).
For some reason, many strategic investors don’t like to lead rounds and they don’t like to name a price. This isn’t true of all strategics but it is true for many of them — particularly those who don’t have a long history in VC. Having a price helps them to evaluate the deal better. Often they’re much better at a “yes/no” decision than naming a price. If you name your valuation you sometimes have to give them a rationale on how similar companies are valued so they can justify their internal case. Knowing that other institutional investors (including your insiders) are paying the same price as them in this round helps.Many Investors.
When you are raising for 8–10 new sources vs. 1–2 sometimes it’s easier just to name price. One reason you might be raising from so many sources is that you haven’t found it easy to find a strong lead investor (for say $20 million) but many sources are willing to write you smaller checks (of say $2–3 million each). Many investors can also be in the opposite situation where you’re so successful that everybody wants to invest. In either case, having a price target can help you get momentum.
Turning The Information Tables
Final point. If done in the right way, each VC meeting can be a great opportunity for you to get feedback on how investors are seeing market valuations in the time that you’re raising (valuations change based on the overall funding economy) and also a chance to hear about how the VCs think about your valuation and/or let you know whether or not you have any perceived problems.
You might politely ask questions like:
Does your firm have a target ownership range?
Do you typically like to lead and do you ever follow?
Are there firms you like to co-invest with?
Does our fundraising size sound reasonable to you?
Are there any valuation concerns you might have that we can address now?
Your goal in forming questions is to get signalling back from the VC.
Remember that fund-raising is a two-way process and you have every right to ask questions that help orient you just as a good VC will ask questions of you.
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📃 QUICK DIVES
1. Do Early-Stage Startups Need a Financial Model For Fundraising?
When you learn about entrepreneurship in school you’re taught to have a clear, strong business plan and financial model when you start out, and to use that as a way to communicate the path your business will take.
The real world is much messier. Any plan you had when you started gets changed quickly. Every day or even hour of your time that you devote to your startup needs to be spent getting it off the ground.
The same is true for a financial model. Your projections will be wildly wrong.
Not only that, but the levers you have at your disposal in the model may not end up being what you think they’ll be — the entire business may change, and you likely don’t know enough yet at the pre-seed stage to be sure.
Investors all know this. They see tons of startups and have many first-hand data points showing that everything can change and often does. What they don’t know is if YOU know that.
Investors are looking to de-risk the idea of investing in you. Startups are inherently so risky that they look for ways to think of your startup as less risky than others. One of those ways is to assess your founder mindset — how much do you “get” what being a founder will really be like?
The thinking there is that the more you “get” it the more you’ll be able to anticipate challenges and be emotionally steady when things get rocky.
This is a very common place where first-time founders and founders who don’t have a strong network fail to build trust with an investor. That might not be fair, but it’s true. Two of those signals for how well someone is ready to be a venture-backed founder are:
How well do they know how to prioritize their time?
Whether they realize everything will change from their “plan” or not. Presenting investors with detailed financial projections at the pre-seed stage fails both of those tests.
Ok… So Why is a Financial Model Useful?
VCs who want to see a model use it as a proxy for understanding whether a founder can correctly break down the incentives and value levers in a problem space.
VCs want to trust that if the business needs to change, the founder will be able to quickly figure out how to evaluate new opportunities and position their product for success in a new market. It's just a different way of de-risking an investment opportunity.
The simple takeaway is that each investor is different in what traits they value and how they reach conviction. So Know your investor - talk to their backed founders, and read their content. Think about the type of investor you want as a partner based on their evaluation approach.
You can download the financial model Excel template here. (Please don’t build some complicated financial model, you don’t need that. Use this simple financial model template and share story behind those number, investors loves that).
2. The Marketing Framework ClickUp Used to Scale to a $4B Company.
Should you go all in on SEO? Launch a TikTok? Buy a billboard? Run a cold email campaign? The options are endless, but what works for one startup might not work for you. So how do you choose?
Hustle fund shared ClickUp’s (valued at $4B) marketing framework that they used to scale to $4B company. Here’s how he thinks about marketing.
The ClickUp Marketing Framework
On the X-axis, we have audience size. On the Y-axis, we have lifetime value (LTV). Where you fall on this model determines your marketing approach.
High LTV, Tiny Audience (e.g., Defense Tech, Enterprise SaaS)
Selling a $500M contract? Google Ads won’t cut it.
You need business development, a strong network, and a killer pitch deck.
Sales is 1:1, relationship-driven, and highly personalized.
Low LTV, Huge Audience (e.g., Keychains, Stickers, Fidget Spinners)
Paid ads don’t make sense here—ad costs eat up profits.
Growth comes from community, virality, and organic reach.
Strategies: Product Hunt, Reddit, TikTok, referral loops (think Dropbox, Boomerang).
Higher LTV, Large Audience (e.g., SaaS, Consumer Products, B2B Software)
With money in the bank, paid media (Facebook, Google Ads) can drive growth.
Early-stage startups often lack budget for this, so experiment wisely.
Sponsoring newsletters (like this one 😉) can work if done right.
Mid-Size Audience, Mid-High LTV (e.g., Niche SaaS, B2B Tools, DTC Brands)
Trade shows, outbound emails, investor intros, and live events become key.
If you’re selling to 100,000 buyers, scaling outreach matters.
The goal: personalized + scalable marketing efforts.
Low LTV, Small Audience? Bad business. Stay away.
How Would ClickUp Go-to-Market Today?
ClickUp is a collaboration + work planning tool valued at $4B. In 2022, they served 100,000+ customers, made $150M in revenue, and raised $400M.
From Clicksup growth manager - If I were starting ClickUp today:
Validate Product-Market Fit First
Talk to users. Why do they love the product?
Use that data to craft killer messaging.
Find Where Users Hang Out
Ask: “How did you hear about us?”
Identify their communities (Reddit, Facebook groups, LinkedIn, etc.)
Build your own engaged community.
Leverage Organic Growth
Launch on Product Hunt, Hacker News, and Reddit.
Invest in SEO—it takes time but pays off.
Scale Once the Foundation Is Strong
Trade shows, outbound emails, targeted ads come next.
Nail product/message fit first, then hit the gas.
It all boils down to:
What’s your LTV?
How big is your audience?
How much $ can you spend on marketing today?
Before throwing money at ads, focus on product-market fit, organic traction, and the right messaging. Once that’s in place—light the fire.
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CURATED RESOURCES
Access Curated Resources For Founders & Investors…
Building Cap Table As A Founder: Template to Download.
Excel Template: Early Stage Startup Financial Model For Fundraising.
2700+ US Angel Investors & VC Firms Contact Database (Email + LinkedIn Link)
All-In-One Guide To Pitch Deck Storytelling - Free Template & Curated Resources.
Write Your Monthly Investor Update (Email Template Download).
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The deep dive on valuation is especially solid, anchoring without naming a price is such a crucial skill in fundraising. Loving the curated resources too… especially the AI startup ideas from YC and the Duolingo playbook. Great piece, Sahil.