Berkus Method

How It Works

The Berkus Method assigns a monetary value — up to EUR 400,000 — to each of five key risk-reduction factors in your startup. The factors are: a sound idea (basic value), a working prototype (technology risk reduction), a quality management team (execution risk reduction), strategic relationships (market risk reduction), and early sales or product rollout (production risk reduction). Each factor is scored based on how well your startup demonstrates it, and the sum of all factor scores gives you a pre-money valuation. The total is capped at EUR 2M for pre-revenue startups and EUR 4M for startups with some revenue traction.

When It's Useful

Use the Berkus Method when your startup is at the pre-seed or seed stage, before generating meaningful revenue. It is ideal when you need a quick, structured valuation that doesn't require financial projections. It works best for startups that can clearly demonstrate progress on the five factors — an idea, a prototype, a team, partnerships, and early traction. It is not suitable for later-stage companies with revenue data, where methods like Revenue Multiple or DCF provide more accuracy.

European Context

The Berkus Method is one of the most geography-neutral early-stage models. Factor caps can be configured per geography within Europe's 5-tier system, but the base methodology does not depend on regional deal medians. This makes it a reliable starting point across all European tiers — from Tier 1 hubs like London and Berlin to Tier 5 emerging markets — without the 29–52% US-to-Europe discount distortions that plague other methods.

Key Parameters

Example

A Berlin-based pre-seed startup has a strong idea (EUR 300K), a working MVP (EUR 350K), two experienced co-founders (EUR 400K), a partnership with a local accelerator (EUR 200K), and no sales yet (EUR 0). Total valuation: EUR 300K + EUR 350K + EUR 400K + EUR 200K + EUR 0 = EUR 1,250,000.