SUMMARY
- Match the method to your stage: Berkus and Scorecard before revenue, revenue multiples once sales exist, DCF only when cash flows are predictable.
- Run at least two methods and walk in with a range. A single number invites an argument, a defended range starts a negotiation.
- Angel tax is gone, but keep a dated valuation note. Rule 57 of the Income-tax Rules 2026 still governs tax valuation of unquoted shares.
Ask three investors what your startup is worth and you’ll get three numbers. They aren’t being difficult. Each one is using a different set of startup valuation methods, and each method rewards a different part of your business.
So we ran a small experiment. We built one hypothetical Indian D2C brand and priced it four ways: Berkus, Scorecard, revenue multiple and DCF. The answers landed anywhere from about ₹2 crore to ₹18 crore.
None of those figures is a market quote. All of them are useful, because the gap shows you what each method believes about your company.
Meet the test startup
Call it Kaveri Naturals, a made-up Bengaluru skincare brand. It sells online, has ₹6 crore in annual revenue, is growing about 80% a year and still loses money. Three founders run it, and they’ve shipped four products.
Every number below is an assumption we picked to show how each method behaves. Plug in your own figures with the Valuation Calculator in the StartupIndiaX Founder Toolkit.
Read More: Free Founder Toolkit for Indian Startups
Berkus: built for the idea-and-prototype stage
Dave Berkus designed his method for startups with no revenue to price. You score five things: the idea, a working prototype, the management team, strategic relationships, and early rollout or sales. Each one earns a slice of a fixed ceiling.
The ceiling is the catch. It was set in US dollars for US angels, and one guide puts the traditional limit at about $2 million before revenue and $2.5 million after it starts. We adapted it to rupees for Kaveri: up to ₹50 lakh a factor, scored at ₹50 lakh for the idea, ₹50 lakh for the prototype, ₹40 lakh for the team, ₹30 lakh for relationships and ₹40 lakh for rollout.
That adds up to ₹2.1 crore. It looks absurdly low for a business doing ₹6 crore in sales, and it is. Berkus is the wrong tool once revenue exists. It’s for the founder with a deck and a demo.
Scorecard: your startup against the average
Bill Payne’s Scorecard method starts with a benchmark: the average pre-money valuation of comparable angel-funded startups in your region. Then you adjust up or down based on how you stack up on team, market, product and competition.
Say similar seed-stage D2C brands raise at an average pre-money of ₹8 crore. Kaveri’s team and growth beat the average, but its category is crowded. Net adjustment: plus 15%. That gives ₹8 crore x 1.15, or ₹9.2 crore.
Scorecard forces you to name your comparables, which is its real value. The weakness is the same thing. It’s only as good as that average, and honest comparables are hard to find when deal terms are rarely public.
Revenue multiples: where most investors start
Once real revenue shows up, investors usually anchor on a multiple of it, drawn from recent deals and acquisitions in a similar business. Apply 3x to ₹6 crore and you get ₹18 crore. A 2x to 4x range runs from ₹12 crore to ₹24 crore.
Here’s the thing to notice. The multiple does all the heavy lifting, and the multiple is an opinion. Growth, margins, repeat purchases and category crowding all push it around. A D2C brand growing 80% on thin margins shouldn’t get the same multiple as a software company with identical revenue.
DCF: careful maths on shaky inputs
Discounted cash flow forecasts what the business will earn and brings it back to today’s money. Razorpay’s Rize guide notes it works best when revenue is stable and predictable, which usually means later-stage companies.
We forced it anyway, using a simplified terminal-value version. Assume Kaveri reaches ₹40 crore in revenue by year five and is worth 2x revenue then, so ₹80 crore. Discount that at 35%, a rate meant to reflect early-stage risk, and you get about ₹17.8 crore. Trim year-five revenue to ₹30 crore and it drops to roughly ₹13.4 crore.
One forecast tweak moved the answer by more than ₹4 crore. DCF isn’t wrong for startups. It’s just honest about how much you don’t know.
The four answers side by side
| Method | Kaveri’s value (illustrative) | What drives it | Natural stage |
|---|---|---|---|
| Berkus | ₹2.1 crore | Idea, prototype, team | Pre-revenue |
| Scorecard | ₹9.2 crore | Comparables and team quality | Pre-seed to seed |
| Revenue multiple | ₹18 crore (₹12 to ₹24 crore) | Sales, growth, the multiple | Early revenue onward |
| DCF | ₹13.4 to ₹17.8 crore | Forecast and discount rate | Predictable revenue |
Picking between startup valuation methods
Stage decides. Razorpay’s guide says pre-seed and seed investors lean on Berkus, Scorecard, Risk Factor Summation or Cost-to-Duplicate because revenue is thin or missing. By Series A, market multiples and DCF take over because there’s real data to feed them.
Most investors also run several methods at once, so each one checks the others. Do the same. Use one qualitative method and one market-based method, then present the range instead of a single figure. Be ready to explain why you’d defend the top end.
Then check what the number costs you. A higher valuation means less dilution per rupee raised, and the Funding Round Dilution Calculator shows how that compounds across rounds.
Read More: Funding Round Dilution Calculator
What changed in India
Angel tax is gone. It was abolished through the Finance Act, 2024 and no longer applies from 1 April 2025. Founders raising from domestic investors no longer have to defend their price against a tax officer’s idea of fair value.
The paperwork didn’t disappear, though. The Income-tax Rules, 2026 took effect on 1 April 2026 and replaced the old Rule 11UA with Rule 57, which sets a net asset value formula for unquoted equity shares. That formula is a tax reference point, not the price you negotiate.
Tax advisers also point out that valuation reports still matter for FEMA compliance and investor due diligence. So keep a short, dated valuation note in your data room. It takes an afternoon and saves a week of back-and-forth later.
Read More: How to Raise Startup Funding in India in 2026
Before your next investor meeting
- Run two methods that match your stage, using your real numbers, not our Kaveri figures.
- Walk in with a range and one sentence on why each end is fair.
- Date your valuation note and keep it with your cap table, so every round starts from a clean record.
Valuation also decides how long your money lasts, so pair it with the Startup Runway Calculator before you set a raise target.
Which method did your last investor use? Tell us in the comments, send this to your co-founder, and try the Valuation Calculator in the Founder Toolkit.
FAQs
What are the main startup valuation methods?
The common ones are Berkus, Scorecard, Risk Factor Summation, Cost-to-Duplicate, revenue multiples, the VC method and DCF. Early-stage investors lean on the first four, while later rounds use multiples and DCF.
Which valuation method suits a pre-revenue startup in India?
Berkus and Scorecard are the usual picks because they don’t need revenue. Berkus scores qualitative factors, while Scorecard compares you with the average comparable startup in your region and adjusts for strengths and gaps.
Is DCF useful for early-stage startups?
Rarely as the main method. DCF needs predictable cash flows, which most early-stage startups don’t have, and small forecast changes swing the result a lot. It works better as a cross-check at Series A and beyond.
Is angel tax still applicable in India?
No. Angel tax under Section 56(2)(viib) was abolished through the Finance Act, 2024 and no longer applies from 1 April 2025. Founders should still keep valuation records for FEMA, due diligence and other compliance.
Why do investors give different valuations for the same startup?
Each investor uses different methods, comparables and assumptions about growth and risk. A revenue multiple, a Scorecard and a DCF can differ by multiples of each other, which is why a range works better than one number.