Agree on a multiple of some objective measure: revenue, profit, EBITDA or AR. Research and find similar deals in the industry and tell the story of how you will increase valuation over time - together. Every founder will overvalue thier enterprise - work with that energy to establish partnership around shared goals.

This is where the magic of SAFE (iSafe in India) notes comes in - allowing you to postpone the valuation discussion till the next sizeable, institutional round. SAFE (simple agreement for future equity) is an instrument widely used where the current valuation is hard to infer and/or is highly contentious on account of widely varying estimates of future growth. Investors and startups find it beneficial to move ahead with SAFE notes in the interest of times and "kick the can down the road" for 18 odd months - at which point it is easier to arrive at agreeable valuation numbers - thereby ensuring forward progress on a deal that otherwise has great alignment for all stakeholders.

I’ve learned that when negotiating valuation, it’s all about using hard data. Market trends, comparable valuations, and revenue multiples help set realistic expectations and avoid subjective opinions. If there’s still a disagreement, I focus on the numbers—things like monthly active users, customer acquisition cost, and revenue growth. These real metrics show progress and potential value. If we can’t meet in the middle on valuation, I suggest tying part of the investment to performance milestones or phased funding based on company growth. This makes it a win-win situation. At the end of the day, it’s about being transparent, using data to back up your position, and finding practical ways to make both sides comfortable with the deal.

I’d focus on aligning expectations by breaking down key valuation drivers—market potential, revenue projections, and risk factors. A fair middle ground often comes from benchmarking industry standards and exploring creative deal structures like earn-outs or performance-based milestones. The goal is to shift the conversation from numbers to long-term value creation.

Focus on aligning interests by emphasizing long-term value creation rather than just the current valuation. Use data-driven benchmarks, comparable market valuations, and future growth potential to bridge the gap. If needed, propose creative structures like milestone-based earn-outs or equity incentives.

When negotiating with startup founders who disagree on valuation, I focus on aligning interests through data and strategic reasoning. I’d start by understanding their perspectives—whether concerns stem from market comparisons, growth potential, or ownership dilution. Using objective metrics like revenue, customer acquisition costs, and industry benchmarks, I’d present a fair valuation range. If gaps remain, I’d explore flexible solutions like performance-based milestones or structured investment terms. Keeping the discussion transparent and solution-focused helps build trust, ensuring both sides feel valued while reaching a mutually beneficial agreement.

Finding common ground in valuation disputes requires a balance of data-driven insights and strategic compromise—aligning expectations through market benchmarks, structured earn-outs, or milestone-based incentives can turn disagreement into a win-win outcome.

> Reframe the discussion around what everyone wants (e.g., successful exit, rapid growth, market leadership). Acknowledge the valuation is a means to these ends, not the end itself. > Beyond just the headline valuation, discuss options like earn-outs, performance-based milestones, or staged investments. These can bridge a valuation gap by tying future payouts to actual achievements, reducing risk for both sides.

Firstly for me is always the forward revenue estimates with costs typically being quite a bit more predictable and plannable. Then I have found it is mostly (for start-ups) around the level of customer take-up and associated revenue confidence. That is where probability frameworks and tools come into play and applied on a weighted average basis from more conservative to more optimistic estimates on future customer revenue. Rather than focusing on a specific valuation number, try to get to an evidence based range estimate and then why and how a buyer/investor should be convinced toward the higher range valuation. As I often like to say "what you need to believe will happen is x and why I think that is feasible is y".