Historical Startup Valuation Example: “De Cost Gaet Voor de Baet Uyt”
When we talk about startup valuation, risk, and early-stage investment, it often helps to step away from formulas for a moment and look at a real-world example. Not one from Silicon Valley, but from the streets of Amsterdam — a city with a long tradition of trade, finance, and entrepreneurship where two important "earning money lessons" can be learned.
During my PhD research, I regularly travelled to the University of Amsterdam to test the then newly developed confocal microscope for medical applications. Walking from Central Station toward my cheap hotel — research budgets were tight — I kept passing a historic building with a sentence on its façade that perfectly captures the foundation of every early-stage valuation discussion: “De Cost Gaet Voor de Baet Uyt.” You can see the building with the inscription on its façade in the header image at the top of this page.
The Story Behind “De Cost Gaet Voor de Baet Uyt”
If you visit Amsterdam and arrive at Central Station, you can walk straight down the Damrak toward “de Dam,” the central square dominated by the Royal Palace. This building, originally designed to display the power and wealth of Amsterdam in the 17th century, now serves as the official reception palace of King Willem-Alexander.
If you are interested in business, startups, or investments, there is another building along this same route that deserves your attention. A few hundred meters from the station, behind the canal boats on your left, you'll see the historic façade carrying the old Dutch sentence:
“De Cost Gaet Voor de Baet Uyt.”
Trade has always been crucial for the Netherlands. The Amsterdam Stock Exchange (established in 1611) is considered the oldest stock exchange in the world. The building with this old inscription dates from the late 18th century and once served as an office for trade information. Today, it is simply a pleasant restaurant for tourists and locals — but the text on the front still carries a timeless message.
The sentence roughly translates to:
“Costs must be incurred before benefits can be earned.”
Lesson 1: the foundation of finance
It captures the foundation of finance:
You must take a risk before you can earn money.
And the higher the risk, the higher the expected return.
It is simple, almost obvious. Yet this basic principle keeps entrepreneurs, investors, and inventors awake at night — especially in the early stages of a startup.
I remember this building particularly well because, during my PhD research, I frequently travelled to the University of Amsterdam. I spent several days every two weeks testing the then newly developed confocal microscope for medical applications. Each trip had the same routine: I stepped out of the train, walked past that building toward my inexpensive hotel (research budgets are not famous for their generosity), and passed the old façade with that same line of text. Over time, it became impossible not to connect it to my later work in startup valuation.
Today we would simply say: you must invest first before you can participate in the profit. But stating the obvious helps us focus on a key question: who invests first, and under what conditions?
As a first principle, I assume you are your startup's initial financier. You invested your own time and money into developing your invention — enough to show a first prototype or at least a model that demonstrates feasibility. That early progress is often what convinces others to participate.
As a second principle, I assume you didn't just win the lottery or have millions waiting in a bank account. While personal wealth doesn't change the fundamental valuation of your invention, it absolutely changes the risk profile — and therefore your decision-making. Investing €200,000 is very different when it comes from your savings versus when it requires increasing the mortgage on your house.
Because of this, most inventors will eventually seek co-financing. And co-financing is not only about money — it is about risk distribution. With a co-investor, you don't have to put all your savings on the line, reducing personal risk significantly.
Of course, this doesn't come for free. The co-investor will share in the profit, reducing your returns. This trade-off between risk and return is one of the most deeply studied phenomena in finance; entire libraries and several Nobel Prizes revolve around it. We won't go into all that here, but we acknowledge a simple reality:
Lesson 2: reducing your risk decreases your future profit
If you want to reduce your risk, you must accept that your share of the future profit
decreases.
It's a lesson as old as Amsterdam's trade history — and as relevant as ever for today's inventors.
This Amsterdam example is a story — but in startup valuation, the same principle becomes a model. If you want to see how these ideas translate into real valuation methods, you can read the full pillar page here: startup valuation.