Diana,
Yes the $2.5M maximum is a suggestion as mentioned in the post. You can certainly inctrease or dcrease that number acdcording to factors sunch as international countries with lower maximum valuations. And you can also add if you see something like “AI” driving prices higher. Hope this helps.
Dave

I meant, would multiply the 2.5M maximum by a factor that takes into account if the company is doing cutting-edge AI? I see that preseed valuations of AI companies tend to be higher, in large part due to the promise and computational expense needed, so wanting your opinion on whether there should be a multiple applied to the maximum 2.5M?

Also, if a company is international and raising funds in different countries, where the average pre-seed valuation is vastly different (US is a factor of ~2.7 greater than in France, for example), how would you suggest rescaling the 2.5M maximum to cater to both investors in US and France?
Thank you

Diana, great question. Each of the four principle areas of the Berkus Method are subjective, an area AI cannot help. Of course, with more information, that opinion will change. Since the information feeding the Method is only from the user, AI would only hlp if used before making the subjective score or valuation of that element. Hope this helps.
-Dave

Tamara, good point. For years, I’ve been adding a comment in my keynotes adjusting original and current liquidity event values for inflation as you did above. But the valuation of startups at or near ignition is much more difficult. For example, valuations offered by investors to entrepreneurs have declined since the stock market hits and probably will decline further if we continue toward recession. There are also far more deals competing for investor funds now than years ago. And the valuations have differed so much in geographical areas that one number is impossible. So to answer your question: This is an art not a science, driven by so many factors that a single number like $500,000 is only a guide not a rule. Is a $500,000 value worth over $900,000 today? Not at all. Too many factors listed above have depressed startup values recently. A tool such as the Method must allow for all these changes and more to remain viable over time. Thanks for bringing up this issue! – Dave

Responses to your questions:
1. Patents do help, but defense and prosecution costs are very high and offset much of the advantage. I count patents into the market validation section by increasing that value.
Yes, add the scores to obtain the valuation.
-Dave

To convert to another currency or location, 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. Thanks for asking.
-Dave