The Risk Factor Summation, or the First Chicago Method, is a unique methodology in startup valuation designed to systematically assess and quantify the risks associated with an early-stage venture. Developed by the First Chicago Venture Capital team, this method is important for entrepreneurs and investors. Its purpose is to provide a structured approach for evaluating critical risk factors such as the management team’s experience, market competition, technological risks, and overall business concept viability. The Risk Factor Summation is especially essential in the early stages of startup valuation when financial data may be limited, offering a transparent and standardised way to understand and quantify the risks inherent in a new business. While applicable across industries, it proves particularly valuable in sectors characterised by high uncertainty and innovation, such as technology and biotech. By systematically assessing and assigning numerical values to these risks, the Risk Factor Summation empowers stakeholders to make more informed decisions in navigating the complexities of early-stage ventures, fostering a clear understanding of the startup’s risk profile and contributing to strategic decision-making and investment negotiations.