Founder's Playbook for Business Valuation and Funding Acquisition

Quick reference list of things you need for a proper valuation.

Founder Playbook: Preparing a Valuation for Funding

Purpose: To help founders prepare a credible, compelling valuation for investors by organizing the key data points, justifying the opportunity, and setting up the cap table and incentives properly.

Financial Metrics

Annual Revenue: Total sales over the last 12 months. Forms the base for valuation multiple comparisons.
Monthly Revenue: Helps show growth rate or seasonality.
Gross Margins (%): Reveals how much profit is left after cost of goods.
COGS Breakdown: Cost structure clarity; raw materials, packaging, shipping.
Operating Expenses: Salaries, marketing, software, rent—burn rate drivers.
EBITDA / Net Income: Operating performance snapshot.
Burn Rate: Monthly spend rate; important for understanding runway.
Cash on Hand: Liquidity position today.

Product & Sales Metrics

Units Sold by SKU: Shows which products are driving revenue.
Average Order Value (AOV): Indicator of purchase behavior.
Sales by Channel: DTC, retail, wholesale mix.
Retail Doors: Current store count and future commitments.
Repeat Purchase Rate: Signals brand loyalty.
Customer Acquisition Cost (CAC): Cost to get a new customer.
Customer Lifetime Value (LTV): Long-term revenue per customer.
Return Rate: High rates flag product or service issues.
Logistics / Fulfillment Costs: Margin-impacting factors.

Market & Positioning

Total Addressable Market (TAM): Overall market size.
Serviceable Obtainable Market (SOM): The share Cosmo can realistically capture.
Category Growth Rate: Momentum behind the market.
Competitive Landscape: Major players, differentiators.
Unique Positioning: What makes Cosmo special?
Pricing Strategy: Are you premium, value, or mid-market?

Forecasts & Planning

Projected Revenue (3–5 Years): Forward-looking financials.
Growth Assumptions: New doors, campaigns, team, SKU expansion.
New Market Opportunities: Retail expansion, geographic, product line.
CapEx / Marketing Investment: What it takes to scale.
Fund Usage Plan: Breakdown of how capital will be deployed.

Team & Support

Founders’ Experience: Track record, credibility.
Key Hires: Gaps to fill and growth team roadmap.
Advisors / Board: Strategic support.
Investor Support: Past investment and future signals.

Capitalization & Fundraising

Pre-Money Valuation Goal: Desired valuation before funding.
Capital Being Raised: How much and what it will do.
Use of Funds: Map of spend to growth milestones.
Current Cap Table: Who owns what today.
Outstanding SAFEs / Notes: Existing convertible investments.
Option Pool Size: Reserved equity for future hires and advisors.

Valuation Inputs

Comparable Revenue Multiples: Use comps to set valuation range.
Previous Funding Rounds: Past investor terms set expectations.
409A Valuation: Needed for pricing stock options.
Discount Rate (for DCF): Estimate risk-adjusted return.
Exit Assumptions: IPO or acquisition targets, timelines, and multiples.

Final Advice: Build your valuation from the ground up, not just the top down. Start with clear data, be conservative in assumptions, and tell a story that aligns brand, growth, and business strategy. Back confidence with evidence, and make it easy for investors to see the opportunity.

Let them believe in the product, but invest in the plan.