Berkus Method: Five Risk Reductions (Indicative Caps)
Pre-revenue startups scored by risk removed — not by hockey-stick forecasts.
| Risk factor | Indicative max add | What must be true |
|---|---|---|
Sound idea (basic value) | up to $500k | Clear problem, believable product thesis |
Prototype / technology | up to $500k | Working demo reduces product risk |
Quality management team | up to $500k | Operators who can recruit and ship |
Strategic relationships | up to $500k | Customers, channels, or partners lined up |
Product rollout / sales | up to $500k | Early revenue path or LOIs with teeth |
Additive model: score each factor 0–$500k. Theoretical max $2.5M under classic US caps — many 2024–2026 seed rounds clear that via traction comps; use Berkus as a floor conversation, not a ceiling law.