Start with the funding plan
A fundraising valuation should be discussed alongside how much capital is required, what it funds and the milestones it is expected to achieve. Build a runway and spending plan before treating a proposed valuation as a standalone target. Investors will assess the uncertainty as well as the opportunity.
Pre-money, post-money and dilution
For a simple primary equity raise, post-money value equals pre-money value plus new investment. If pre-money value is £3 million and investment is £750,000, post-money value is £3.75 million and the new investor owns 20%. This simplified example excludes option pool changes, convertible instruments, fees and different share rights.
When the company has little or no revenue
Historical earnings may not be a useful anchor. Evidence may include product progress, commercial commitments, intellectual property, funding needs and plausible operating scenarios. Separate signed contracts from pipeline and explain the assumptions connecting activity to future cash flows. A precise spreadsheet is not the same as reliable forecasting.
EIS and SEIS are separate from price negotiation
HMRC advance assurance concerns specified scheme conditions based on information supplied. It is not approval of the company’s valuation or a general endorsement of the investment. A funding discussion still needs commercial evidence, and investors must consider their own position.
Review the ownership mechanics
Check when an option pool is created, how convertible instruments convert and which investor rights apply. These terms can change the founders’ outcome even where two offers use the same headline valuation. Legal and tax advice should accompany the investment documentation.
Source: HMRC: venture capital scheme advance assurance. Checked 10 October 2026.
Your starting checklist.
- Current and fully diluted cap table
- Funding amount and proposed use of funds
- Forecast assumptions and milestone plan
- Term sheet, convertibles and option pool proposal
Start with the purpose. Confidential documents can follow through an agreed channel.
Commission a funding valuation brief with clear outputs
Tell us whether you are preparing an initial price discussion, reviewing proposed terms or need a valuation for a specific recipient. Identify the company, share structure, investment stage and relevant date. Forecasts, rights and the proposed use of funds should tell a consistent story.
A scope can identify the methods and evidence to assess, scenarios, ownership mechanics and reporting output. Financial preparation, valuation, scheme eligibility and legal documentation are different workstreams; agree who handles each. Start with an outline rather than delaying an enquiry until every document is ready.
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