How is the valuation of a company determined?

Im not sure if i understood your question, but here i go:

There are a few metrics that can be used (typically thought at MBA programs) but obviously accessible to leveraged investors through advisors and or legal aids.

These metrics give an idea on value based on marketable assets, capital investments, liquidity, etc. depending on the startup's nature.
Aside from the above, an investor pretty much decides on the spot. My first startup was funder out a simple idea being pitched and funding got me through beta, at which point we saw it was not worth pursuing. My second startup I funded myself after selling a company and then a group of investors valued the startup based on users (freemium model) and potential market cap. - for a market cap number you have to be reasonable too. Just because the market is worth 100billion doesnt mean you can cap at that.-
Depending on the amount you ask for and who you pitch to, an investor might want to do a combination of revenue, users, assets, patents, contracts, pre orders, etc...

If you need help crafting a pitch or giving you feedback give me a call.

Best of luck.

I have approached valuation many times, in many different ways, both for my consulting business and when I've raised capital for my startups. The short answer: it is based on the future earnings potential of your business, and in your case, an investors' belief in your vision/potential. Your story to support a valuation, without any revenue, will be built on reasonable projections and analogous evidence, and then discounted by the investor for risk. Every valuation exercise is unique, but the basics remain on how much risk they will assume for an expected return (IRR). If you would like me to help you quickly build a valuation story for your startup, or you have other questions, please give me a call.

You've received a lot of answers to this question already, but the short answer is that it is a long story! The easiest way for me to respond is to direct you to a blog entry I wrote on the topic, which spells out the most common methods of valuation and their typical applications: http://www.stantonlawfirmllc.com/2014/11/a-diamond-in-the-rough-how-should-i-value-my-business/
Let me know if you want to chat!