Dave Berkus · 1996 (2016 update)
Berkus Method
Designed for angel investors evaluating very early-stage deals where no metrics exist. The 2016 update by Berkus emphasised that the method is a starting framework, not a precision instrument.
Best for
Pre-revenue / early-pre-seed startups with no financial projections yet.
Formula
Sum of (up to) 5 elements × $500K each = max $2.5MInputs needed
- Sound idea (basic value)
- Quality management team
- Prototype (reduces technology risk)
- Strategic relationships (reduces market risk)
- Product rollout or sales (reduces production risk)
Caveats
- Caps at $2.5M — not useful for startups raising above pre-seed
- $500K per element is a 1996 anchor — Berkus's 2016 update tightened the methodology, not the number
- Geography-blind by design; valuation reality varies regionally
Source
↗ https://angelcapitalassociation.org/blog/after-20-years-updating-the-berkus-method-of-valuation/Verified 2026-06-03.
Other methods