The VC method in one line
Post-money today = exit value ÷ target return × (1 − future dilution), and pre-money = post-money − investment. It’s a quick way to sanity-check an investor’s offer — not a substitute for a formal valuation.
Valuation rules in India
- Preferential allotments need a registered valuer’s report under the Companies Act.
- Shares issued to foreign investors can’t be priced below fair value under FEMA, certified by a CA, SEBI-registered merchant banker or practising cost accountant.
- Angel tax no longer applies — see angel tax. Formal valuations: valuation services.
Frequently asked questions
How is a startup valued by VCs?
Early-stage investors often use the VC method: estimate the company's value at exit, divide by the return they need, and adjust for dilution from future rounds to arrive at today's post-money valuation.
Is the VC method valuation enough for issuing shares in India?
No. Indian share issues need a registered valuer's report for preferential allotment and, for foreign investors, a FEMA fair-value certificate from a CA, SEBI-registered merchant banker or practising cost accountant.