S&I Gazette #51: Raising at the wrong valuation can kill your startup

Valuation isn’t just a number, it’s a make-or-break decision for your fundraising success.

Get it wrong, and you could set your startup up for failure before you even begin.

Let’s explore the dangers of overpricing your startup

Raising at an inflated valuation might feel like a win, but here’s what happens next:

1. Down rounds – If you can’t justify your valuation in the next round, you’ll have to raise at a lower one, hurting credibility and team morale.
2. Lost investor trust – Smart investors see through overpricing. If they think you lack a clear grasp of your business fundamentals, they’ll walk away.
3. Funding gaps – A valuation too high can shrink your investor pool, making it harder to close the round.

How to calculate a fundable valuation?

A valuation investors take seriously is based on:

1. Revenue & traction – Does your number align with your growth metrics?
2. Comparable startups – What have similar companies raised at your stage?
3. Market potential – Are you solving a problem big enough to justify the valuation?

So, what investors think about the overvaluation vs. undervaluation?

If it’s overvalued: “This founder is unrealistic. Can they execute?”

If it’s undervalued: “What’s the catch? Are they struggling?”

The sweet spot? A valuation that reflects real traction, aligns with investor expectations, and leaves room for future growth.

Bottom line: A great startup at the wrong valuation won’t get funded.?

Get your number right, and the money will follow.