DCF in Startup Valuation

Question: Why would you use financial methods for the valuation of a startup company? Answer: Because the public market uses it for valuations. And more in depth, for these 2 reasons: 1| The public market has an effect on private valuations With public market we mean companies traded on the various stock exchanges. They are usually large, but a small percentage of their shares is traded…

DCF Valuation for Startups

We already talked about projections, cash flows and relevant topics surrounding startup financial valuation. But how do you convert all these parameters to the future to calculate the value of the company today? One of the major methods to be used is called Discounted Cash Flow (DCF). What is DCF? To start, check out this tutorial from Investopedia to get a general idea of what DCF is.…

[PARAMETERS UPDATE P5.8] EBITDA MULTIPLES

You can refer to the table below to see how the EBITDA multiples for the industries available on the Equidam platform will change on February 29th, 2024. These are applied to compute the Terminal value in the DCF method with Multiple and the potential exit value in the VC method. The data is based on the early 2024 estimate, published annually by Prof. Aswath Damodaran of New York…

PARAMETERS UPDATE P5.8

On February 29th, 2024, you’ll be upgraded to the latest version of Equidam, with updated valuation parameters. This update may result, on average, in a slight valuation decrease. To help explain why, we have provided more detailed analysis in the article below. What's changing: 1. Average valuations used in the Scorecard Method and maximum valuations used in…

How to Calculate Startup Valuation: Step by Step

Valuing a startup can feel like plotting a course in the dark, as you try to reconcile significant uncertainty and risk with a clear-headed financial assessment. By understanding the purpose, drivers and methodology behind startup valuation, founders and investors can get much more value out of the process, and produce a result that encourages constructive fundraising negotiations and ensures…

Understanding Startup Valuation: Intuitions from real estate

Similar to startups, valuing residential real estate presents a particular set of challenges: each property is unique in terms of location, condition, design, and a host of other qualitative factors that influence its value. Market conditions can fluctuate widely, and a property's worth can be affected by both micro and macroeconomic factors that are often difficult to predict. Emotional and…

Valuation for growth startups and maturity stage companies

Use Equidam to calculate a fair valuation for your company at any stage of development, with the expansion of our industry leading methodology to account for risk and growth potential at later stages. While Equidam is primarily used for startup valuation around the pre-seed to series A stages, our framework is entirely applicable through the full life-cycle of a company. This flexibility is…

The role of qualitative methods in startup valuation

In a previous article, we looked at the role that financial projections (and the associated DCF methods) play in startup valuation, which you can read here. The brief summary is that they provide a valuable perspective on the potential of a company, and the ambition of the founders, but introduce uncertainty by looking at forecasts without understanding the ability to execute. To address this,…

The role of financial projections in startup valuation

The valuation of early stage companies is a one of the more complex and contentious topic in the startup world. On one hand, it is regarded as a finger-in-the-air exercise to get an approximate price for an intrinsically risky asset class. On the other hand, there are some strong feelings about the right way to go about it, and the precise methodology to use. It’s too easy to get lost in the…

PARAMETERS UPDATE P5.6

On February 23, 2023, you’ll be upgraded to the latest version of Equidam with updated valuation parameters. This may result, on average, in a slight valuation decrease. What's changing 1 | Average valuations used in the Scorecard Method and maximum valuations used in the Checklist Method We base our estimates on real transactions by country since February 1st, 2020. Whenever we were…