The Berkus Method assigns a value to five key success factors of a startup, each with a maximum value of $500,000. The total pre-money valuation can reach up to $2.5 million. The five factors are:
1. Sound Idea: This represents the fundamental concept of the business. If the idea has been proven to some extent, it can be valued up to $500,000. 2. Prototype: A working model or prototype that demonstrates the feasibility of the product can add another $500,000. 3. Quality Management Team: A skilled and experienced management team can significantly impact the startup's success, adding up to $500,000. 4. Strategic Relationships: Partnerships and strategic relationships that can accelerate growth can contribute up to $500,000. 5. Product Rollout or Sales: Early traction or initial sales can add the final $500,000 to the valuation.