Valuations are, without question, one of the most slippery concepts in business. A friend once described them as “like trying to nail jelly to a tree” – not entirely scientific, but hard to improve upon.

Even the professionals aren’t immune. The rules (if we can call them that) are loose, subjective, and open to interpretation. Particularly for start-ups, where the valuation tags along like a shadow – a constant companion, if not always a welcome one.

And here’s the awkward truth: start-ups don’t really have a single valuation. They have several different ones. Each distinct, each serving a different purpose, and each capable of producing a very different number. Let’s take a look at four different variants…

1. Valuation at your latest raise

Your latest raise may of course be your first raise – and for most companies, that first raise is pivotal. It sets the tone for everything that follows. Get it wrong and you’ll feel the consequences in every subsequent round.

At the pre-seed stage, precision isn’t possible. The number usually reflects judgement factors such as: 

– The calibre of the founding team (by far the most important factor)

– The quality of the idea

– The size of the opportunity

And, if we’re being candid, a little arithmetic on the back of an envelope:

> Valuation = (100 ÷ % equity offered) × cash required

We need £250k, we’re willing to part with 20% equity. So that gives us a £1.25m ‘valuation’.

Beauhurst data suggests the average UK pre-seed valuation is £1.4m, with a typical raise of around £250k and about 20% equity given away. A tidy, if approximate, convention.

At this stage, it’s conjecture. And that’s acceptable – because it has to be.

2. Current valuation for fundraising

This is not the same as what your company is worth to a buyer. It’s the figure you would put forward if you raised today – what investors are invited to accept.

To illustrate the gap:

– Early fundraising valuation (the paper number): £1.25m 

– Early exit valuation (the reality, on day one): £0 

That gulf is there from the outset and usually widens with time.

So how does the “current valuation” number move? It rises with progress – specific, tangible events that either reduce risk or expand opportunity. Think of it as a chain of adjustments, each one adding incremental weight to your story:

– Product launched (+20%)

– First clients onboarded (+20%)

– First revenue banked (+40%)

– Senior hire secured (+10%) 

– Etc.

Each milestone justifies a step up, building from the baseline set at the last raise. If your previous valuation was £1.25m and since then you’ve launched your product (increase valuation by 20%, for example) and onboarded your fist clients (increase valuation by another 20%, for example) your new valuation could justifiably be set at around £1.8m.

The principle is simple: valuation adjustments translate real-world progress into an investor-facing number. Done properly, they reassure investors that your valuation isn’t plucked from the air, but grounded in evidence.

The practical challenge is keeping track of it all – and being able to justify the movements with clarity. Platforms like Venture Comet automate this: connecting to accounting systems and automatically spotting value-driving events (revenue milestones, client sign-ups etc.) to create an ongoing audited log of valuation changes – and a constantly up to date, credible valuation figure.

That way, your valuation narrative is less about optimism and more about evidence – which, in the long run, is far more persuasive.

3. Target exit valuation

This is the number investors actually care about.

When they buy in at £1.25m, they aren’t focused on £1.25m. They’re asking themselves whether you can exit for £12.5m (10x) or more in a reasonable timeframe.

By definition, the target exit valuation must be a multiple of the last raise. Otherwise, why invest?

4. Actual exit valuation

And then, the only figure that truly counts: what a buyer will pay.

This bears little relation to any of the others. A buyer isn’t interested in how you justified prior rounds. They are concerned only with what the business is worth to them – often via EBITDA multiples, revenue multiples, or other such models.

If a buyer values your sector at 8× EBITDA, and you generate £400k profit, your business is worth £3.2m to them.

It really doesn’t matter that you once raised at £5m. They simply don’t care that investors pencilled in £20m. The buyer’s number is the only one that results in an actual cheque.

This is where theory collides with reality – and reality rarely loses the argument.

Putting it together

So, that’s four different valuations – all legitimate in their own way, but rarely aligned:

– Last raise valuation – what you raised at 

– Current fundraising valuation – what you’d claim today 

– Target exit valuation – what investors are banking on 

– Actual exit valuation – what a buyer will really pay 

And the spread can be stark. For example:

– Last raise valuation: £6m 

– Current fundraising valuation: £10m

– Target exit valuation: £36m

– Actual exit valuation today: £8m 

So when asked, “What’s your business worth?” – the only honest reply might be:  “Well, that depends which definition you’d like me to use.”