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How is the valuation determined?

Market demand determines the valuation. Valuation shifts with time, depending on the amount of capital chasing startups. Right now, early-stage high-growth startups are often valued at $3 to $20 million for their first financing. Lifestyle businesses are valued at less. Companies that have raised several rounds of financing and are further along are worth far more.

In order to get a sense if a valuation seems reasonable, look at who the Lead Investor is.  How experienced are they?  How much did they invest under the same terms?  Wefunder is in the process of requiring that each company identifies the Lead who helped set the valuation.