The First Chicago Method, or the Risk Factor Summation Method, is a valuation approach developed by the First Chicago Venture Capital (FCVC) team. This method aims to provide a systematic way to assess the value of early-stage startups by assigning numerical values to various risk factors associated with the venture. Unlike traditional valuation models that heavily rely on financial projections, the First Chicago Method strongly emphasises identifying and quantifying the risks inherent in a startup. It involves evaluating factors such as the management team’s experience, market competition, technology risks, and the overall business concept. By assigning a numerical score to each risk factor, investors can aggregate these scores to determine the startup’s overall risk profile, influencing the valuation. The First Chicago Method is particularly valuable in the early stages of a startup when financial data may be limited, providing a structured and transparent way to evaluate a venture’s potential by focusing on risk mitigation strategies. This method is crucial for entrepreneurs and investors as it facilitates a more informed discussion about the startup’s risk landscape and aids in making well-founded investment decisions. Its application extends across various industries, especially those characterised by high uncertainty and rapid innovation, such as technology, biotech, and healthcare. In these sectors, where traditional valuation methods might fall short due to unpredictable market dynamics, the First Chicago Method offers a practical framework to navigate the valuation process. Overall, the First Chicago Method stands out for its systematic approach to risk assessment, providing a valuable tool for estimating the value of early-stage startups in industries where risk evaluation is paramount for strategic decision-making and investment success.