While the dilutive method does not provide a definitive valuation figure, it is an indispensable tool for early-stage companies seeking funding. By estimating the potential dilution that investors may require, founders can align their capital-raising efforts with realistic valuation expectations.
It’s important to plan ahead and have your exit strategy clear from the start. What do you want to do with your life and your company? And how much of it should you give to investors in order to see new equity flowing into the business, propelling you towards the next stage of expansion?