The theory is that the market will grow and/or you will
exhibit exponential growth. Take for example Google which is valued by the outstanding shares value (market cap) which is driven mostly by public perception of market growth and Google's operation with respect to real and perceived growth..
So apply this to your startup.. get VCs to bid on it.. If you have revenues then you can go to a bank and
see what type of credit line your business qualifies for.
But since most startups don't have revenue then you really don't know.
Essentially your initial idea is worth $0... this is why angel investors are nice to have. They make the first real
valuation.
The theory is that the market will grow and/or you will exhibit exponential growth. Take for example Google which is valued by the outstanding shares value (market cap) which is driven mostly by public perception of market growth and Google's operation with respect to real and perceived growth..
So apply this to your startup.. get VCs to bid on it.. If you have revenues then you can go to a bank and see what type of credit line your business qualifies for. But since most startups don't have revenue then you really don't know.
Essentially your initial idea is worth $0... this is why angel investors are nice to have. They make the first real valuation.