Berkus method

The Berkus method, proposed by US investor Dave Berkus, is a valuation method for pre-revenue startups with the potential to reach CHF 20,000,000 of revenue within five years.

‍

It values five success factors separately, each capped at CHF 500,000: the soundness of the idea, the existence of a prototype, team quality, strategic relationships or go-to-market potential, and actual product launch. The sum of these five factors is capped at CHF 2,500,000, regardless of how ambitious the startup's stated goals are.

‍

This deliberate cap fundamentally sets the Berkus method apart from a discounted cash flow approach: it is not meant to estimate the company's maximum potential, but to set a defensible floor in the face of a complete absence of financial track record, a logic also found in our overview of startup valuation methods.

‍

For business valuation of a pre-revenue Swiss or French startup, the Berkus method offers a structured, quick-to-apply framework in the absence of historical financial data, to be used alongside the Scorecard method (Bill Payne) or the Risk Factor Summation (RFS) method, rather than as a standalone method.