The three methods buyers use
Replacement cost asks what it would cost to rebuild what you have. This is the dominant method for pre revenue products, and it starts from engineering months rather than from anything financial.
Revenue multiple applies where revenue exists and is likely to survive the handover. Small, self serve, diversified revenue holds up. Revenue tied to founder relationships largely does not.
Strategic value applies when a specific buyer wants something specific, such as your users, your domain or your position in a category. This is the only method that produces a premium, and it depends entirely on finding that buyer.
What raises the price
Almost everything that raises the price reduces the buyer's risk rather than improving the asset. A running deployment, clean documentation, clear ownership and an available founder are worth more than additional features.
- The product currently runs and can be demonstrated
- Documentation exists and is current
- Intellectual property ownership is clean and evidenced
- Users are active rather than merely registered
- A memorable domain name is included
- The founder is available for a handover period
What lowers it
The biggest discounts come from uncertainty. A codebase nobody can explain, unclear ownership, or a product that has been offline long enough that nobody can confirm it works are all priced defensively.
- Nobody left who understands the system
- Contractor code without written assignment
- An unresolved legal or data protection issue
- Users who signed up long ago and never returned
- Founders who do not agree on whether to sell
Realistic expectations
Most failed startups sell for less than founders hope and more than they fear. A working product with a modest user base and no revenue commonly transacts in the low tens of thousands. Products with real recurring revenue reach materially higher.
The number that matters is not what you spent. Money spent on acquisition that did not retain, or on a team that has left, is not recoverable in a sale. Buyers pay for what transfers, not for what was invested.
Common questions
How much is my failed startup worth?
Usually the cost of rebuilding what transfers, discounted for risk. A working, documented product with some users commonly reaches the low tens of thousands, and revenue raises it substantially.
Does the money we raised affect the price?
No. Buyers value what transfers to them, not what was spent. It may affect how proceeds are distributed among your shareholders.
Is a domain name worth anything on its own?
Sometimes a great deal. A short, memorable domain can be worth more than the product attached to it.