Both research and practice acknowledge that an increasing number of business models are realized by multiple organizations in innovation ecosystems. Little research addresses how organizations develop these business models jointly over time and balance the tensions that occur from the divergent goals and interests of each actor. We propose that the concept of value valuation may be helpful in understanding this process. Value valuation is a balancing process that takes place between actors in an innovation ecosystem when collaborating around a business model for sustainability, making sure that the benefits of ecosystem membership outweighs its costs, leading to continuing support of the initiative. Based on four smart city projects for a circular economy we find that value is valuated along two dimensions: economic, environmental and social value; and mutual and individual value. Value valuation takes place in iterative cycles and is characterized by a number of mechanisms, including action-based experimenting. These findings open up a research agenda to study the dynamics of ecosystem-based business model development.