Mark tells us that the biggest misconception of valuations is that the founders alone determine their valuation. The fact remains, its the market that always decides your valuation. Mark discovered from his personal experience on both sides of the table, that most founders think their value is much higher than what the market will bear. The exception to that rule is- when a startup has a solid customer base, impressive revenue (month-over-month) and a realistic predictable revenue model. What's necessary is to follow your seed investor's lead, because you partnered with them earlier for a reason. If you chose a strategic partner, they will help you determine the value. Both are instrumental in having an accurate valuation.

Tom Britton says that the obvious answer is potential but when looking at the potential of one start-up over another (from both a market size and market quality perspective) you also need to look at the team behind the idea, the unique selling point, and how well the idea addresses a customer's needs or wants. Tom tells us how startups can fit the bill when they want to decide where do they belong.

Most start-ups will see themselves at being at the top of a range of comparables with infinite potential but that's a bit of ego and belief mixing together and creating a facade. Unless you've got solid data on your figures (sign-ups, purchases, uses of your product) compared with similar startups at the same point in their development, then it's going to be hard trying to figure out where do you exist in the range. The best thing to do is to try and get multiple valuations from various Angels / VCs / other investors, and not necessarily use the average but put yourself somewhere in the range that you've been given.