Startup Valuations Outside the Money Centers

Last week I was in San Francisco at the Dreamforce conference and I had the opportunity to catch up with several awesome entrepreneurs that I’ve known for a few years. It’s always fun to hear stories first-hand to see if they corroborate what’s being said in the news, especially with regards to acqui-hires, valuations, and fundraising. By all accounts it appears that things are frothy and that there’s a localized bubble around technology in that market. Valuations that have continued to be exceptionally high for Y Combinator companies, even after PG warned they would correct 12 months ago, but haven’t done so to date.

As for other geographic markets, I’ve seen several angel deals for different parts of the country in the past few months. Here are approximate pre-money valuations outside the money centers of California and New York:

• Idea with no prototype: $500,000 – $1,000,000
• Working prototype: $1,000,000 – $2,000,000
• Successful entrepreneur: add $500,000 – $1,000,000 on top of standard valuations
• Accelerator program graduate: add $500,000 – $1,000,000 on top of standard valuations

As you can see, these valuations are pretty generic and not based on revenue, profitability, or other factors since most things don’t exist at this idea or prototype stage. In the end, it’s likely to be a $1MM – $3MM pre-money valuation for pre-revenue technology deals outside the money centers.

What else? What are your thoughts on these startup valuations outside the money centers?