Investment Valuation

PREMIUM PLAYBOOK

Valuation & Planned Use-of-Funds

Business valuation is never straightforward for any company. For startups with little or no revenue or profits and less-than-certain futures, the job of assigning a valuation is particularly tricky and always more subjective than you might think. A startup valuation may account for factors like your team’s expertise, product, assets, business model, total addressable market, competitor performance, market opportunity, goodwill, and more.

If you have actual revenues, you are able to use concrete economic numbers as a starting point. But in the context of fundraising, your company is ultimately worth what you and your investors agree it is worth.  It is fair to say that valuing a startup is both an art and a science.

Most venture capital firms use multiple formulas to find the pre-money value of a business, it will help you to understand the different startup valuation methods.  

The Premium PlayBook includes various methods through which the value of a startup can be made a little more scientific than pure art:

• Cost-to-duplicate

• Market Multiple

• Discounted Cashflow

• Valuation by Stage

• Comparable Transactions Method

• Berkus Method

• Scorecard Valuation Method

• Risk Factor Summation Method

• Venture Capital Method

• Book Valuation Method

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