Capital raises
Capital raise valuations for company boards
An independent view of the business for the board ahead of a priced round. A valuation never sets or lifts the price agreed with investors.
- Prepared for the company and its board, not for investors or employees
- A round price is evidence, not a concluded value
- Signed by a suitably qualified business valuer at Valuation Group
From $1,995 + GST
Delivery: agreed before commencement. Delivery time starts once payment and all required information have been received.
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- Part of Valuation GroupValuation Group Pty Ltd, ABN 48 702 469 252
- Signed report plus the company’s DCF modelBoth start-up tiers include the model
- Fixed, published feesScope and fee agreed before we start
- Clear reasoning, cited sourcesSourced to the ATO and legislation
What we value, and on what basis
- Board evidence ahead of a priced round
- Market value in its ordinary meaning
- Whole company (enterprise or equity value)
- The method or methods the evidence supports
- The signed valuation and the company’s DCF model
Basis of value and unit of value
- Basis of value
- Market value in its ordinary meaning, applied differently depending on purpose: pre-round board evidence, related-party pricing, the market value of an ordinary share for the ESS start-up concession test, the market value of an ESS interest for grants outside that concession, or SAFE and note conversion analysis
- Unit of value
- Whole company (enterprise or equity value), one class of shares, or a parcel, an option or right, depending on the engagement
A priced funding round is set by negotiation between the company and its investors: a valuation from Start-Up Valuations, a division of Valuation Group Pty Ltd, never sets or lifts that price. A capital raise valuation is prepared for the company and its board, not for investors or employees. An independent view is commonly commissioned in five situations: before the board negotiates, where related parties or existing shareholders are putting in some or all of the new capital, where a new round is priced below a prior one, where ordinary shares need a market value for the ESS start-up concession test around the same time, and where a SAFE or convertible note is converting. The basis is market value in its ordinary meaning, and the unit of value depends on which of those jobs you need done.
01When to commission
When does a funding round need an independent valuation?
In our view, a price genuinely agreed at arm's length with a new, unrelated investor is good evidence of the value of the shares that investor took. Even so, there are recurring situations where a company benefits from a separate, documented independent view.
When an independent valuation is usually worth commissioning
- The board wants a documented, independent position on file before it enters negotiations, not after the term sheet is signed
- Related parties, directors, or existing shareholders are contributing some or all of the new capital
- A new round is priced below a prior round, where anti-dilution or ratchet provisions in the existing preference terms may be triggered
- Ordinary shares need a market value for an employee share scheme grant made around the same time as a round
- A SAFE or convertible note is converting and the board needs to understand how its cap, discount and class rights should be treated
02Purpose
What does a capital raise valuation actually value?
The purpose of the engagement decides the basis of value, and the basis decides the method. A board wanting a documented view before it negotiates a round is usually asking for the market value of the whole company or its equity. A company valuing ordinary shares for the ESS start-up concession needs the market value of an ordinary share when the employee acquires the ESS interest 1; in our view this is often a narrower question than the headline round value, particularly where the round was priced for preference shares. Analysing a SAFE or note at conversion is narrower again: how that instrument's own terms interact with the round, not a valuation of the whole company from scratch. The unit of value follows the same logic.
Independent view for the board before negotiating
- Basis of value
- Market value in its ordinary meaning: our chosen practice standard 2
- Typical unit of value
- Whole company, enterprise or equity value
Related parties or existing shareholders are participating
- Basis of value
- Market value in its ordinary meaning: our chosen practice standard 2
- Typical unit of value
- Whole company, or the specific class being issued
Ordinary share value for the ESS start-up concession test
- Basis of value
- Market value of an ordinary share when the ESS interest is acquired 1
- Typical unit of value
- One class (ordinary shares)
ESS grants outside the start-up concession
- Basis of value
- Market value of the ESS interest itself; for unlisted rights, the employee may choose the regulation value 3, 4
- Typical unit of value
- The right or option itself; see ESS and ESOP valuations
SAFE or note conversion analysis
- Basis of value
- Depends on purpose (our judgement): market value in its ordinary meaning for tax purposes 2, or the definition in the instrument or shareholders' agreement where one applies
- Typical unit of value
- The converting instrument, and the class it converts into
The detail and sources
Where a SAFE or note conversion, or an ESS grant made around the same time, needs to be reflected in the company's financial statements, the applicable basis is fair value, an AASB 13 fair value for the instrument or an AASB 2 option value for the grant, which is a different basis from market value for tax purposes 2. We offer this financial reporting valuation work; it is scoped and quoted separately from the capital raise valuation itself.
03Method
How does the method change with the company's stage?
Method selection follows the evidence available at the company's stage, not a fixed formula; our guide on how to value a startup sets out the full method by stage. For a capital raise specifically, that usually means calibrating to the company's own recent arm's length rounds or SAFE and seed terms where they exist, adjusted for the rights attached to each class and for how much time has passed since the round, with a scenario-weighted discounted cash flow used as a cross-check rather than the primary method; each report records which methods we relied on and why.
04Round price
Why doesn't the round price set your ordinary share value?
The ATO has no published rule that a recent round price is the market value of a company's ordinary shares 2, 5. For the start-up concession market value test only, the ATO says a company may use an alternative method, such as a DCF or a valuation prepared for capital raising purposes, and remain protected if the value it produces is not less than the value under an approved LI 2025/19 method the company was eligible to use 6, 7. In our view there is a good reason to be careful with a round price on its own: where a round is priced for preference shares, those shares often carry rights ordinary shares do not, such as a liquidation preference or anti-dilution protection, and a lower value for the ordinary class sitting behind that preference stack can be entirely defensible. What matters is that the valuer records why the classes differ, including their respective rights and any adjustment applied, as part of the valuation itself, rather than as something pieced together after the fact. Our guide on using a recent capital raise as valuation evidence works through that question in full; this page focuses on what happens around the raise itself.
The detail and sources
Do not treat the round's headline price, or a SAFE's valuation cap, as the value of an ordinary share, an option, or the whole company. Each is evidence for a specific purpose, not a concluded value.
05Option pool
How does the option pool change who gets diluted?
- Option pool
A pool of shares set aside, and usually unallocated at the time of a round, for future grants to employees and advisers under the company's employee share scheme.
Where the pool sits in the drafting decides who bears its dilution. A pool created, or topped up, inside the pre-money number dilutes the existing shareholders, mainly founders, before the incoming investor's shares are counted at all. A pool added on top of the post-money number dilutes everyone, including the new investor, in proportion to their holding. The term sheet's definition of pre-money settles this: read it before assuming either treatment.
- Fully diluted
A share count that commonly includes every share on issue of every class, options and rights granted, and, as the term sheet defines it, the unallocated option pool and any SAFE or convertible note as if converted, so that percentages are calculated against the same, complete base. Each term sheet sets its own list, and not every list includes every item; our guide on pre-money and post-money valuation covers how that can vary.
06SAFEs and notes
How do SAFEs and convertible notes fit into the valuation?
A SAFE or convertible note sits outside the ordinary share register until it converts, so the first step is establishing what it converts into: which class of share, on what trigger, and at what price once its own cap or discount is applied. From there we build the fully diluted share count as if that instrument had already converted, and we treat its cap or discount as a data point dated to the day the instrument was signed, since that is the point in time it actually reflects, not today. In our view a cap or discount is one dated input among several, to be weighed against the other evidence rather than adopted on its own as the answer. Whether a specific SAFE or note is treated as debt, or as already converted, in the bridge from enterprise value to equity value is a judgement call depending on its own terms and the conversion event actually expected. Full definitions of SAFE and note mechanics are covered in our guide on SAFEs and convertible notes; this page covers how they behave once a valuation is underway.
07Dilution
How does dilution compound across multiple rounds?
Each round, and each pool top-up, adds shares to the fully diluted count. The percentage everyone holds after two or three rounds is rarely intuitive from the headline numbers alone, which is why we build the fully diluted cap table before and after each round the board is considering, rather than working from the round's own summary.
Illustrative. Fictional numbers.
Fictional numbers. Not market evidence.
The detail and sources
Worked example: a pool top-up and two priced rounds
Fictional numbers. Not market evidence.
A company starts with 8,000,000 founder ordinary shares and a 1,000,000 share unallocated option pool, 9,000,000 shares fully diluted.
Before its seed round, the term sheet tops the pool up to 1,500,000 shares inside the pre-money number. The extra 500,000 shares dilute the founders alone; the incoming investor is unaffected because its own shares are counted after the pool is set. The seed investor then takes 2,000,000 preference shares. Fully diluted shares are now 11,500,000, and the founders, who started at about 88.9% fully diluted (100% of shares on issue), now hold about 69.6%.
At Series A, a new investor subscribes for 3,000,000 further preference shares, with no pool top-up this time. Fully diluted shares rise to 14,500,000, and the founders now hold about 55.2%.
Two things follow. The founders' percentage fell for two kinds of reason, a pool top-up and new investment in two rounds, which a cap table showing only the latest round hides. And the shares issued in both rounds were preference shares carrying rights the founders' ordinary shares do not have, so neither round is, on its own, the value of an ordinary share.
08Related parties
What changes when related parties or existing shareholders are in the round?
For tax purposes, unless a provision defines it specially, market value has its ordinary meaning: a hypothetical willing but not anxious buyer and seller, dealing at arm's length, with no special value to a particular buyer. The ATO says the onus for a replicable, defensible valuation stays with the taxpayer even when a professional valuer is engaged 2. Where related parties, directors, or existing shareholders provide some or all of the new capital, the agreed price is weaker evidence of that standard than one agreed with a new, unrelated investor. In that situation, a separate independent view is commonly commissioned for the board's file: the negotiated price still stands as the commercial deal, and the valuation supports the numbers the board relies on, for share issue records, a nearby ESS grant, or a later tax position.
The detail and sources
Figures and thresholds on this page reflect LI 2025/19, related ATO guidance and the Corporations Act ESS provisions, as checked against those sources on 27 September 2026.
09Directors
What do directors need on file when they set the issue price?
Sections 180 and 181 of the Corporations Act 2001 impose civil obligations on directors to exercise care and diligence, and to act in good faith, in exercising their powers and duties 8. Section 232 separately lets a court make an order where a company's affairs are conducted in a manner that is contrary to the interests of the members as a whole, or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members 9. In our view, what protects a board is less the price itself than what the file shows about how it was reached: the evidence the directors had in front of them, how the rights attached to each class were factored in, and what the issue does to the shareholders who are not taking part in it. Our role is to build that evidence, the valuation, its assumptions, and how each class was treated, and to set it out so the board can point to it later. Whether that evidence is sufficient to meet the directors' duties, and whether a particular issue carries oppression risk, is a question for your lawyers, not for us.
10ESS and tax
How does this feed into your ESS and tax position afterwards?
For the ESS start-up concession test only, LI 2025/19 sets conditions on its approved methods 10. Neither method is available if the directors reasonably anticipate a change of control within 6 months. Among other conditions, the net tangible assets method (Method Two) is not available if the company raised more than $10 million in debt or equity in the 12 months before the valuation time 10.
The detail and sources
For that same test, the ATO says a company may use an alternative method, such as a DCF or a valuation prepared for capital raising purposes, and remain protected if the value it produces is not less than the value under an approved LI 2025/19 method the company was eligible to use 6, 7.
Where s 1100X requires a valuation document for an unlisted ESS offer, an arm's length agreement qualifies only for interests of the same class, so a preference-share subscription agreement does not serve that role for an ordinary share or option offer 11. ASIC relief separately allows an expert valuation of ESS interests that are not ordinary shares 12. Whether s 1100X applies to your offer is a question for your lawyer.
The same round evidence can also matter later for capital gains tax: a market value figure from around the time of the raise may become a reference point if a cost base or capital proceeds question later turns on the market value substitution rule in section 116-30 of the ITAA 1997, covered in full on our tax restructure valuations page. Your tax adviser confirms how the CGT position applies; we prepare the valuation evidence.
Method selection and board documentation for the ESS side are covered on our ESS and ESOP valuations page and our how ESS valuations work guide.
11Report use
What can, and can't, the report be used for?
The practice holds no Australian Financial Services Licence and is not an authorised representative. Reports are prepared for the company, its board, or its advisers, never as advice to an employee or investor on whether to acquire, exercise, hold, accept, or sell anything.
The detail and sources
This is valuation work for the company and its board, not financial product advice to an individual employee or investor. It is also not the kind of report used in a Corporations Act takeover or scheme process.
A capital raise engagement of this kind is a valuation engagement, as described in the APES 225 guidelines we follow 13. We are an independent valuation practice, not an accounting firm. Every report is signed by a suitably qualified business valuer at Valuation Group.
12What we need
What do we need to start?
Requested after engagement, through your private matter link, not a form upload.
The detail and sources
Documents that speed up a capital raise engagement
- ASIC company extract and group structure chart, if there is more than one company
- Constitution and shareholders' agreement, including any valuation, transfer, drag and tag or leaver clauses
- Fully diluted share register and cap table, covering every class, option, right, SAFE and convertible note
- Terms of each share class (preferences, conversion, anti-dilution, dividends, votes)
- SAFE, convertible note and warrant documents on foot, including caps, discounts, maturity and triggers
- Term sheets and subscription agreements for prior rounds: date, price, class, amount, and whether the investor was related to the company
- Draft term sheet for the proposed round
- Whether any sale or change of control is in contemplation
- Financial statements or management accounts, cash balance, monthly burn and runway
- Budget, forecast and milestone plan supporting the raise
- Proposed ESS or option pool terms, if a grant is planned around the same time
13Fees
What does it cost, and how long does it take?
Capital raise work for a start-up sits in one of our two start-up tiers, and which one applies follows the company's structure, not the fact that a raise is underway: the Simple start-up valuation, $1,995 + GST, is for a company with one share class and no SAFEs, convertible notes or ESS; the Standard start-up valuation, $3,495 + GST, is for ESS work, SAFEs or notes, several share classes, or option-pool modelling. A capital raise commonly involves a SAFE or note converting, an option pool, or more than one share class, which puts it in the Standard tier; a raise into a single-class company with none of those features can still be Simple. Both tiers include the signed valuation and the company's own discounted cash flow model as a deliverable and cross-check, not just a report. Where the raise is in dispute or heading to court, our dispute or court expert report applies instead, at $4,495 + GST. Delivery for any of these is agreed with you before we commence rather than promised as a fixed number of days, because scope varies with the number of classes, instruments and prior rounds involved. Delivery time starts once payment and all required information have been received.
Simple start-up valuation
A company with one share class and no SAFEs, convertible notes or ESS.
$1,995 + GST
Delivery: agreed before commencement. Delivery time starts once payment and all required information have been received.
- The signed valuation
- The company’s DCF model
- A valuation engagement, as described in the APES 225 guidelines we follow
Request a valuationNothing starts until you accept it.
Standard start-up valuation
ESS work, SAFEs or convertible notes, several share classes, or option-pool modelling.
$3,495 + GST
Delivery: agreed before commencement. Delivery time starts once payment and all required information have been received.
- The signed valuation
- The company’s DCF model
- A valuation engagement, as described in the APES 225 guidelines we follow
Request a valuationNothing starts until you accept it.
Dispute or court expert report
A start-up matter in dispute or heading to court.
$4,495 + GST
Delivery: agreed before commencement. Delivery time starts once payment and all required information have been received.
- The expert report
- Prepared for the court process
- A declaration of independence and conflicts
Request a valuationNothing starts until you accept it.
Add-ons
Retrospective valuation date+$495 + GST per date
Additional entity+$795 + GST per additional entity
Delivery time starts once payment and all required information have been received.
The detail and sources
A retrospective valuation date adds $495 + GST per date, and each additional entity in the group adds $795 + GST. Delivery time starts once payment and all required information have been received. Full detail on all three tiers and the add-ons is on our pricing page.
14FAQ
Frequently asked questions
Does a valuation set our raise price?
No. The price is negotiated between the company and its investors. A valuation gives the board an independent view to negotiate from and a documented position for the file; it does not fix, cap, or lift the number in the term sheet.
Does a SAFE's cap tell us what an ordinary share is worth?
It tells us the ceiling on the price at which that instrument converts, and the date that ceiling was agreed. The actual conversion price depends on the round and any discount. We treat the cap as one dated input into valuing the ordinary share class directly, not as a substitute for that valuation.
Do we need a valuation for every round?
Not always. In our view, a price a new, unrelated investor was willing to pay in a genuine arm's length negotiation already reflects the market for the shares that investor took. A separate independent view is more commonly commissioned where related parties or existing shareholders are participating, or where the result will feed an ESS grant or a later tax position.
Does the option pool count against the founders or the new investor?
It depends on how the term sheet defines pre-money; see "How does the option pool change who gets diluted?" above, or our guide on pre-money and post-money valuation for the maths in full.
Sources (13)
- Income Tax Assessment Act 1997, section 83A-33. Commonwealth (text via ATO Legal Database). Current text as displayed 27 Sep 2026; inserted by No 105 of 2015. Accessed 27 Sep 2026. S006 ab
- Market valuation for tax purposes (Guide). Australian Taxation Office. Current at February 2025. Accessed 27 Sep 2026. S009 abcdef
- ESS, Market value of unlisted rights to acquire listed shares and stapled securities. Australian Taxation Office. Last updated 27 June 2022; QC23093. Accessed 27 Sep 2026. S007
- Income Tax Assessment (1997 Act) Regulations 2021, Compilation No. 16. Federal Register of Legislation (Office of Parliamentary Counsel). Compilation date 27 June 2026 (includes F2026L00831). Accessed 27 Sep 2026. S008
- Market value (ESS in detail hub). Australian Taxation Office. QC82046 (no date shown). Accessed 27 Sep 2026. S010
- ESS, Safe-harbour valuation methods. Australian Taxation Office. Last updated 1 October 2025; QC45990. Accessed 27 Sep 2026. S002 ab
- LI 2025/19, Explanatory Statement. Australian Taxation Office. 9 Sep 2025. Accessed 27 Sep 2026. S004 ab
- Corporations Act 2001 (Compilation No. 148), Volume 1, ss 180-181, ss 180(1) and 181(1). Federal Register of Legislation. Compilation dated 27 August 2026. Accessed 27 Sep 2026. S022
- Corporations Act 2001 (Compilation No. 148), Volume 1, s 232, s 232. Federal Register of Legislation. Compilation dated 27 August 2026. Accessed 27 Sep 2026. S023
- LI 2025/19 Legislative Instrument. Australian Taxation Office; Federal Register of Legislation. Made 9 Sep 2025; registered 11 Sep 2025 (F2025L01085); commenced 1 Oct 2025. Accessed 27 Sep 2026. S003 ab
- Corporations Act 2001, Compilation No. 148, Volume 5 (ss 1100W, 1100X, 1100Y, 1100ZA). Federal Register of Legislation. Compilation date 27 August 2026 (includes Act No. 69, 2026); ss 1100W to 1100ZB inserted by No 14 of 2022. Accessed 27 Sep 2026. S013
- 22-370MR ASIC provides legislative relief to facilitate employee share schemes. ASIC. Media release 22-370MR (2022). Accessed 27 Sep 2026. S012
- Valuation Services (APES 225, APES GN 20, APES GN 21). Accounting Professional & Ethical Standards Board (APESB). APES 225 (2024) effective 1 Jan 2025; APES GN 20 (2025). Accessed 27 Sep 2026. S014
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