What discount rate should I use for a startup DCF?

VCs target 30–50% IRR on early-stage investments to account for high failure rates. Seed-stage startups often use 50%; Series A/B use 35–40%. Later-stage growth companies closer to profitability use 20–30%.

What is the difference between pre-money and post-money valuation?

Pre-money valuation is the company's value before new investment. Post-money = pre-money + investment raised. If a company is valued at $5M pre-money and raises $1M, post-money is $6M, and the investor owns 16.7% ($1M ÷ $6M).

How do VCs value pre-revenue startups?

Common methods: Scorecard (compare to similar funded startups, typically $1–3M for seed); Berkus method (up to $500K per milestone like team, prototype, market); risk factor summation; or simply what the market will bear based on team pedigree and market size.

MRR (Monthly Recurring Revenue) is monthly subscription revenue. ARR = MRR × 12. Both measure predictable, recurring revenue from subscriptions. Don't include one-time professional services or perpetual license fees in ARR — VCs will catch this and adjust your multiple down.

Startup Valuation Calculator — Revenue Multiple & DCF | KalkWise

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the startup valuation calculator — revenue multiple & dcf?

In short

Startups are commonly valued using revenue multiples (e.g., 5x–10x ARR for SaaS) or discounted cash flow (DCF). A SaaS startup with $2M ARR growing 100% YoY might attract 8–12x ARR = $16–24M valuation. Early-stage startups with no revenue often rely on comparable company multiples or VC scorecard methods.

Estimates startup valuation using two methods: revenue multiple (ARR × multiple) and discounted cash flow (DCF), then averages them.

How to use this calculator

1Enter your annual recurring revenue (ARR) or annual revenue.
2Enter the applicable revenue multiple for your sector and growth stage.
3Enter projected annual cash flow for the DCF analysis.
4Enter discount rate (VC target return rate, typically 30–50% for early stage).
5Enter projection years for the DCF analysis.

The formula

revenue val=ARR×multiple

DCF=cash flow(1+r)^t summed over n years

Revenue Val = ARR × M; DCF = Σ CF / (1+r)^t; Average = (Revenue Val + DCF) / 2

ARR: — Annual recurring revenue
M: — Revenue multiple
CF: — Projected annual cash flow
r: — Discount rate
n: — Projection years

Worked example

The scenario

$1M ARR, 8x multiple, $200K projected cash flow, 35% discount rate, 7-year projection.

gives

The result

Revenue-based valuation = $8M. DCF valuation = $630K. Average estimate = $4.3M.

Common use cases

Estimate valuation ahead of a fundraising round.
Set expectations for angel or VC conversations.
Compare valuation methods for board presentations.
Evaluate whether a term sheet is favorable.

Limitations & assumptions

Revenue multiples vary dramatically by sector, growth rate, and market conditions.
DCF is highly sensitive to discount rate assumptions — small changes swing results widely.
Pre-revenue startups need alternative methods (scorecard, Berkus, risk factor summation).
Market comps and investor sentiment matter more than any formula in early-stage fundraising.

Frequently asked questions

It depends on your sector and growth rate. SaaS companies growing 50%+ might command 8–15x ARR. Slower-growing businesses might get 2–5x revenue. In 2021–2022, multiples were at historic highs; 2023–2025 saw significant compression. Check recent comparable deals in your sector.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.

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