Private Company Valuation Workbench
A headline valuation is the price of one share of the newest, most senior, most protected security in the company. Founders and employees hold a different security. This workbench prices the round with the methods that suit the stage, then runs the cap table and the liquidation waterfall so you can see what that price actually pays each holder at exit.
Inputs
Only the methods that apply to this stage are shown.
What each method says the company is worth before the money
Bars are each method’s range when its main assumption moves; dots are midpoints. The dashed line is the price used below.
Ownership before and after the round
Fully diluted, with the option pool topped up to the target the investor requires.
Who gets what, at every exit value
Each line is one class of holder. Preferences are paid by seniority; each preferred series then converts to common only if that pays it more, and the model iterates until no series wants to switch.
At the chosen exit: implied versus actual
Grey is what each holder’s ownership percentage implies. Colour is what the waterfall pays.
What that means
Drag the exit value down. On the Series B preset the founders’ share of their implied value falls steeply below the post-money, because a participating preference collects its money back and shares in what is left. On a 1× non-participating round the gap closes as soon as the exit clears the preference stack.
How to read a private valuation
1. Pick methods by stage, not by preference
Before revenue there is nothing to multiply and nothing to discount, so the pre-revenue methods — Berkus and the scorecard — are structured opinion: they turn judgements about team, product and market into a number that can be argued about consistently. Once revenue is real and recurring, a revenue multiple against comparable companies starts to carry information. Once there are earnings, EBITDA multiples and a DCF take over and the venture methods fall away. The presets weight methods this way, and they refuse to weight a revenue multiple on a company with no revenue.
The spread between methods is the finding, not a nuisance. On the seed preset the midpoints run across a factor of more than two. A blended number is a negotiating anchor. Treating it as a measurement is how both sides end up surprised.
2. The VC method and First Chicago double-count if you let them
The VC method discounts by demanding a large multiple — 20× at seed — because most investments fail. First Chicago puts the failure in explicitly, as a scenario with a 55–60% probability. Apply a venture-style 50% discount rate on top of that and the risk of failure is charged twice. The presets use 22–30% on First Chicago for exactly this reason.
3. A DCF on a growth company is mostly a terminal value, and sometimes a negative one
On the Series B preset the terminal value is more than twice the DCF: the ten forecast years are worth less than nothing combined, because growth is being bought with reinvestment. Lower the sales-to-capital ratio from 3.0 to 1.5 and the whole DCF turns negative — growing 90% a year at that capital intensity destroys value at an 18% discount rate. That is not a model failure. It is the single most useful thing a DCF says about a startup: growth is only worth paying for if each dollar reinvested buys enough revenue.
4. The option pool shuffle
New investors usually require the option pool to be topped up to a target percentage after the round, and they require the top-up to happen before their money goes in. The new shares therefore come out of the pre-money. The investor’s percentage is unaffected; the existing holders absorb all of it. The workbench shows the resulting “effective pre-money” — the price the founders are actually selling at — next to the headline.
5. Headline valuation is not common-stock value
A $150m post-money means the newest investor paid a price that values 100% of the fully diluted shares at $150m. But the newest investor’s shares come with a preference: in any exit they are paid back first. Founders’ common has no such protection. So common is worth less than the headline price per share, and at exits below the preference stack it is worth nothing at all. The payout chart marks that zone.
Terms matter as much as price. A 1× non-participating preference is the market standard: it protects the investor’s money without taking a second bite. Carta’s Q1 2026 data puts liquidation preferences and participation rights near multi-year lows — terms currently favour founders, which makes a participating preference worth noticing when one appears. A participating preference takes both: money back first, then a pro-rata share of what remains. A cap limits the second bite, and above the cap the investor converts. On the Series B preset, a founder at an exit equal to the post-money receives about seven-tenths of what the cap table implies. At six-tenths of post-money, about four-tenths.
What this deliberately leaves out
Options are treated as exercised with the strike ignored, which slightly overstates the pool’s share at low exits. No SAFEs or convertible notes, no anti-dilution adjustment on down rounds, no pay-to-play, no dividends accruing on the preference, no management carve-out. All of them exist in real term sheets and most of them move money away from common. The presets are illustrative parameter sets anchored loosely on published medians; they are not a pricing service, and none of this is investment advice.
Part two covers public companies — what the current share price already assumes, and how a leveraged buyout makes its return.