Thursday, February 13, 2025
Reading Time: 4 min

Why it makes little sense to enter a funding round with too high a valuation.

A realistic company valuation for startups is crucial. Yes, a realistic one. Why? We often observe that founders strive for the highest possible valuation to give away fewer shares. However, this can be problematic in the long term.

Hear us out: An inflated valuation carries the risk of a later down-round when new investors set a lower valuation. This leads to a devaluation for existing investors. Trust? Gone. As a responsible financing platform, we tackle this issue proactively.

To ensure fair and realistic valuations, OOMNIUM has all company valuations validated by our external partner BV4. BV4 is a leading independent expert for startup valuations. This collaboration enables us to disprove the prejudice that Public Rounds (crowdinvesting) push through inflated valuations at the expense of inexperienced investors.

An investment in a startup is primarily an investment in the founders

Our goal is not to suppress valuations, but to find realistic dimensions. We understand that too low a valuation can be equally harmful, as founders might be forced to give away too many shares too early. This could reduce the startup's attractiveness for future funding rounds.

Specifically, this means: We aim for balanced valuations. These should ensure that founders retain sufficient "skin in the game," which is important for potential investors. We firmly believe that an investment in a startup is primarily an investment in the founders themselves.

Transparency for well-founded investment decisions

Why this is important: Through our approach of involving independent experts like BV4, we create transparency and trust. We enable our investors to make well-founded decisions and help the startups on our platform obtain a fair and realistic valuation that supports their long-term growth.

This serves the purpose of a responsible and sustainable funding ecosystem that serves both the interests of investors and those of startups.

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