VC & PE Glossary
What Is Scorecard Valuation?
Updated
Definition
Scorecard valuation is an angel method that adjusts a regional average pre-money valuation up or down based on weighted factors — team, market, product, competition, and traction.
Useful for: Founders, Investors
Scorecard valuation is a pre-revenue pricing approach that scales a regional benchmark pre-money by percentage adjustments for key company attributes.
How it works
Start with average pre-money for stage and region (e.g., $4M seed software). Assign weights: team 30%, market 25%, product 15%, competition 10%, etc.
Score each factor above or below average → apply +/- percentages to baseline. Strong team (+20% on 30% weight) and weak competition (-10% on 10% weight) net to a suggested $4.8M pre-money.
Similar to risk factor summation but uses percentage multipliers on categories rather than fixed dollar steps per risk line. Berkus method instead adds dollar values for milestones.
Angel groups use scorecards to align syndicate members before issuing SAFEs. Institutional leads rarely price solely via scorecard once metrics exist.
Why it matters
- Founders: Prepare evidence for each weighted bucket — team bios, LOIs, prototype demos — not just TAM slides.
- Investors: Document assumptions when leading pre-seed on scorecard logic for co-investor transparency.
Common mistake
Presenting scorecard output as 409A or binding valuation. It is a negotiation anchor for illiquid early deals, not fair market value for tax purposes.
Related ideas
See also risk factor summation, Berkus method, pre-money valuation, and 409A valuation.
Related ideas
Full guide: What is the scorecard valuation method?.
Related terms
- Berkus Method — The Berkus Method is a pre-revenue startup valuation framework that assigns dollar value to five risk categories — sound idea, prototype, quality team, strategic relationships, and product rollout — capping early-stage valuation around a few million dollars.
- Risk Factor Summation — Risk factor summation is an early-stage valuation method that adjusts a baseline regional pre-money up or down based on scored business risks — management, competition, stage, and similar buckets.
Common questions
Short answers for founders, LPs, and operators