The Checklist method values an early-stage startup by how much of a market-based maximum it has already earned. Here is the formula, the five criteria, where the maximum comes from, and a US pre-seed example worked to the dollar.
The Checklist method is a way to value a startup that has little or no revenue. You start from a maximum pre-money valuation drawn from recent funding rounds in your country, split that maximum across five criteria, and award your company a share of each slice according to how far it has progressed. The sum of those shares is the valuation. (This is the startup valuation method, not the due-diligence checklist used in M&A.)
“Checklist method” is the name we use at Equidam for our version of an approach first published by the angel investor Dave Berkus. It is one of the five methods Equidam runs on every company, and at the idea stage it carries 38% of the result, level with the Scorecard method. Our overview of the five methods and the Help Center reference cover the basics; this article adds the history, the data behind the maximum and a full example.
What is the Checklist valuation method?
The idea is that a young company’s value is built from blocks of retired risk. An experienced, committed team reduces execution risk, a working product reduces technology risk, and paying customers reduce the risk that nobody will buy.
Our sample valuation report (p.10) describes it this way: “The valuation of the startup consists of intangible building blocks that sum up to the assumed maximum valuation. The maximum valuation is split in 5 criteria according to their weight. The startup obtains portions of these maximum criteria valuations according to how close its qualitative traits are to the most desirable ones.”
In formula form:
Pre-money valuation = Σ (maximum valuation × criterion weight × criterion score)
Each criterion score runs from 0% to 100% of what an ideal company would have achieved on that criterion. Because no score can exceed 100%, the result can never exceed the maximum. That ceiling is the defining feature of the method, and the reason the choice of maximum matters so much.
Is the Checklist method the same as the Berkus method?
It descends from Berkus, and the two produce very different numbers for the same company.
Dave Berkus developed his method in the mid-1990s, and it became known as “the Berkus Method” after it was published in the book Winning Angels in 2001, as he explains in his 2016 update. The original gives a startup up to $500,000 for each of five elements: a sound idea, a prototype, a quality management team, strategic relationships, and product roll-out or sales. In Berkus’s words, those numbers are maximums that allow “a pre-revenue valuation of up to $2 million (or a post roll-out value of up to $2.5 million).” Several popular guides still present $2.5M as the pre-revenue cap; it is the post roll-out ceiling.
In the same update, Berkus wrote that “the original matrix is too restrictive, and should be a suggestion rather than a rigid form,” and that the US average angel valuation had already moved above his caps. Replying to a reader on the same page in 2021, he suggested a fix for other markets: “first determine the average valuation of pre-revenue startups in your area. Divide by five and that should be the maximum you would pay for each of the items in the matrix.”
The Equidam Checklist method keeps Berkus’s structure (additive building blocks under a ceiling) and changes three things:
- The ceiling comes from market data. Instead of a fixed $2M or $2.5M, we use a country-specific maximum computed from recent angel, pre-seed and seed rounds, refreshed with every parameters update.
- Slots are percentages of that ceiling, so they scale with the market rather than sitting at a fixed $500,000.
- The criteria are reworked. Operating stage is a criterion of its own, and IP protection sits with product roll-out. According to our methodology document, Equidam “reviewed the weights system and the information on which the scores are attributed.”
A note on the name: “Checklist method” is our label, not an industry standard, and outside Equidam most people say “Berkus method.” Our guide to which valuation methods to use and avoid covers the wider family.
What are the five criteria, and why those weights?
The default criteria and weights are in the sample report (p.10). The traits below are a selection; the full list is in the report’s appendix (p.22):
- Quality of the core team (30%): traits such as the founders’ time commitment, industry experience, business and technical skills, and whether the team includes serial entrepreneurs with successful exits.
- Quality of the idea (20%): traits such as validation of demand, feedback from early adopters or industry experts, competition, competitive advantage and customer loyalty.
- Product roll-out and IP protection (15%): how far the product has come, from concept to prototype to launch, and what IP protection applies and is in place.
- Strategic relationships (15%): traits such as the advisory board, the type of current shareholders and the strength of relationships with key partners.
- Operating stage (20%): stage of development and current profitability.
Each trait, answered in our questionnaire, contributes a percentage to its criterion. As the Help Center puts it, the scores per criterion range “from 0% (farthest to the most desirable situation) to 100% (closest).” The weights are defaults: founders can adjust them in the platform’s Advanced Settings, as our post on the role of qualitative methods explains. If you change one, be ready to explain why to an investor.
Why does the team get the largest weight?
Because that is what investors say they look for. In a survey of 885 institutional venture capitalists, Gompers, Gornall, Kaplan and Strebulaev found that VCs see the management team as “somewhat more important” than business characteristics such as product or technology. In the working-paper version, 47% of VC firms named the team as the single most important factor.
The evidence does not all point one way, and we would rather say so. Following 50 VC-backed companies from business plan to public company, Kaplan, Sensoy and Strömberg found that business lines stayed stable while management turned over substantially. They concluded that, at the margin, investors “should place more weight on the business (‘the horse’) than on the management team (‘the jockey’).” We think 30% for the team is a sensible default, and the other 70% keeps the business in the result. If your investors weigh the business more heavily, the weights can reflect that.
Where does the maximum valuation come from?
The maximum sets the scale for everything else, yet most guides use a hypothetical figure. Equidam computes it from Crunchbase data on angel, pre-seed and seed rounds from the last 30 months, by country, with outliers removed (sample report appendix, p.21; Data Sources). The July 2026 update used 4,606 rounds, and countries with fewer than 20 local rounds fall back to their sub-region (Parameters Update P6.3). Current values for about 90 countries are in the P6.3 table of average and maximum valuations.
For the United States, the current Checklist maximum is $17,000,000, up from $15,000,000 in the February 2026 cycle (Equidam internal data, parameters effective July 2026, published in the P6.3 table). It is a high-end benchmark near the top of recent angel, pre-seed and seed rounds in the country.
That high anchor is deliberate. The maximum describes what a company that has retired nearly all early-stage risk could command, so a typical pre-seed company should land well below it. Early-stage prices are also widely spread. In our July 2026 US data, the Checklist maximum ($17M) is 2.6 times the Scorecard average ($6.45M). Angel Capital Association data, measured differently, point the same way: across 3,774 investments, the 80th-percentile pre-seed valuation was 2.7 times the 20th percentile (ACA, 2024). A ceiling set at the average would squash that range and tell a strong company it is worth no more than a typical one.
How do you calculate a Checklist valuation? A US pre-seed example
Take Frostline, a hypothetical US pre-seed company building wireless temperature sensors and monitoring software for refrigerated food shipments. Two founders work on it full time, one with eight years in the industry and a previous startup behind her. It has a working prototype but no patents yet. The market is large and competition is about what you would expect for the space. It has signed a pilot with a regional refrigerated-freight carrier, and it has no revenue yet. Our Scorecard method article values the same company, so you can compare the two methods directly.
Scored against an ideal company, it might look like this:
| Criterion | Weight | Maximum slot | Score | Contribution |
|---|---|---|---|---|
| Quality of the core team | 30% | $5,100,000 | 60% | $3,060,000 |
| Quality of the idea | 20% | $3,400,000 | 50% | $1,700,000 |
| Product roll-out and IP protection | 15% | $2,550,000 | 30% | $765,000 |
| Strategic relationships | 15% | $2,550,000 | 35% | $892,500 |
| Operating stage | 20% | $3,400,000 | 20% | $680,000 |
| Total | 100% | $17,000,000 | $7,097,500 |
Each slot is the maximum times the weight ($17,000,000 × 30% = $5,100,000 for the team, and so on), and each contribution is the slot times the score ($5,100,000 × 60% = $3,060,000). Adding the five contributions gives $3,060,000 + $1,700,000 + $765,000 + $892,500 + $680,000 = $7,097,500.
As a check, the weighted score is 0.30 × 60% + 0.20 × 50% + 0.15 × 30% + 0.15 × 35% + 0.20 × 20% = 41.75%, and 41.75% of $17,000,000 is $7,097,500.
So this company has earned about 42% of the maximum. The team is its strongest block, and its lowest scores are product and operating stage, as you would expect before launch. Launching the product and turning the pilot into paying customers would fill the slots with the most room left.
The Scorecard method puts the same company at $8,465,625. The Scorecard figure is higher because Frostline beats the average US company on team and market, while the Checklist figure shows how much risk is still left before launch.
How does that compare with other pre-seed valuations?
The H1 2026 Valuation Delta puts US pre-seed companies at $5.16M and the global median at $5.20M, based on more than 3,000 pre-seed valuations completed on Equidam. Those are the results of full Equidam valuations, not prices of closed rounds, so they are context rather than a benchmark for the Checklist input. Our example sits above them, which is one reason a single method’s result should be read next to the other four rather than on its own.
What would the same startup be worth under Berkus’s original caps?
Apply the same five scores to Berkus’s original slots of $500,000 each, mapping team to “quality management team,” idea to “sound idea,” product to “prototype,” relationships to “strategic relationships,” and operating stage to “product roll-out or sales”:
$500,000 × (60% + 50% + 30% + 35% + 20%) = $500,000 × 195% = $975,000.
That is less than a seventh of the Checklist result for an identical company, and all of the difference comes from the ceiling. Berkus’s caps are fixed, while the average US angel, pre-seed and seed round in our July 2026 data was $6.45M (P6.3 table). A method capped at $2M before revenue cannot reach even the average deal, however strong the company.
Berkus’s own “divide the local average by five” fix helps, but it creates a different problem. If the whole matrix tops out at the average, a company that scores 100% everywhere is only ever worth an average company. That is why Equidam anchors the Checklist method to a high-end benchmark and the Scorecard method to the average.
How much does the Checklist method count in a full valuation?
The Checklist result is blended with the Scorecard method, the Venture Capital method and two DCF methods, using default weights set by stage of development (sample report appendix, p.20):
- Checklist and Scorecard carry 38% each at idea stage, 30% at development, 15% at startup, 6% at expansion and 0% at growth and maturity.
- The VC method holds 16% from idea through expansion, rises to 20% at growth and drops to 0% at maturity.
- The two DCF methods take the rest: 4% each at idea stage, then 12%, 27%, 36%, 40% and finally 50% each at maturity.
The logic, in the report’s words: qualitative information matters more “where performance uncertainty is extremely high,” and “quantitative information is more reliable in later stages” (p.20). Companies can adjust these weights too.
A company with a prototype and no revenue would typically be at the development stage, where the Checklist result carries 30% of the blend. For Frostline that is $2,129,250 (30% × $7,097,500). The other 70% comes from the Scorecard, VC and DCF methods, and the final report gives a range rather than a single point. The methodology page covers the full model.
Checklist vs Scorecard vs Berkus: what is the difference?
The Checklist method and the Scorecard method are often confused because both score qualitative traits, but they ask different questions. The Scorecard asks how your company compares with an average peer. The Checklist asks how much of an ideal company’s risk reduction you have already achieved.
| Checklist method (Equidam) | Scorecard method (Equidam) | Berkus method (original) | |
|---|---|---|---|
| Anchor | Country maximum from recent rounds (US $17M) | Country average from recent rounds (US $6.45M) | Fixed: $2M pre-revenue, $2.5M post roll-out |
| Formula | Σ (maximum × weight × score) | average × (1 + Σ weight × score) | Sum of up to $500K per element |
| Scores | 0% to 100% of the ideal | Above or below average, 0 = average | Dollar amount per element |
| Criteria | Team, idea, product/IP, relationships, operating stage | Team, opportunity, product, competition, partners, funding required | Idea, prototype, team, relationships, roll-out or sales |
| Upper limit | The maximum | None built in | The fixed cap |
US anchors are from the P6.3 table; Berkus figures are from his 2016 update.
In practice the two work as a pair: the Scorecard method rewards a company that is ahead of its peers, and the Checklist method ties the result to concrete milestones. When the two diverge sharply, find out why before you talk to investors, because an investor is likely to ask.
What are the limits of the Checklist method?
We see four limits come up most often.
The first is the ceiling: a company whose potential sits far outside the normal range of angel and seed rounds cannot show that here. As we wrote in our post on qualitative methods: “If you are making the case that your company is likely to be an outlier… qualitative methods probably shouldn’t be the primary focus of your valuation.”
Scores are also judgments. A questionnaire makes them consistent, but deciding how close a team is to “ideal” is still a call someone has to make. Berkus himself wrote that “this is an art not a science” in a 2022 reply on his update page. Our defense is transparency: every criterion score in an Equidam report is built from the questionnaire answers the report lists.
The method measures milestones rather than economics. It looks at what exists today (team, validation, product, network, stage) and ignores unit economics, margins and market size in dollars. That helps at pre-seed, when projections are guesses, and hurts later, when the numbers are the story. It is also why the Checklist method gets zero weight at growth and maturity, where the DCF methods measure what the team and product are worth through revenue and cash flow.
Finally, a weighted checklist lets a strong team offset a weak market. Angels often do not decide that way. Maxwell, Jeffrey and Lévesque found that angels screen for fatal flaws first and reject on a single one. A good Checklist score will not rescue a company with a deal-breaker.
How should founders use a Checklist valuation?
Treat it as a map of the risk you have retired and the risk that remains. As Bill Gurley put it, people treat valuation as an “award for past behavior” when it is really “a hurdle for future behavior”: the number you raise at sets expectations you then need to meet. The breakdown shows which milestones would move your valuation most, and gives an investor reasoning they can check criterion by criterion.
In practice:
- Use your own country’s maximum. A US anchor on a company raising in a smaller market will usually overstate the result.
- Score honestly. Inflated scores are the easiest thing for an investor to challenge, and they undermine the rest of the report.
- Read it next to the other methods. The weighted blend of five, presented as a range, is far more defensible in a negotiation than any single method.
Equidam runs the Checklist method alongside four other methods on data from 160,000+ valued companies (Equidam internal data), 30,000+ public comparables, 90+ countries and 600+ industries (Data Sources). If you want to see your own Checklist breakdown and the full blend, see our plans.