How To Value A Business

Valuation is too often where the conversation between investors and founders falls apart. With a grounded methodology, the result is easier to discuss and the chance of closing a fair deal increases. In this article, we are going to walk you through a startup valuation using 5 of the most commonly used valuation methodologies. First, let's define 'valuation' for startups Valuing a…

Data sources

EBITDA Multiples Online database compiled and curated by Prof. A. Damodaran, NYU Stern School of Business By industry Updated annually Also from NYU Stern, updated annually: Long term growth Market risk premiums Beta Advanced Revenue & EBITDA Multiples A database of 30,000 companies listed on global exchanges. By company Updated…

Methodology

More than an estimate Traditionally innovative Leading valuation approaches, formalized 5 valuation methods in one Qualitative aspects Scorecard Method Checklist Method Developed by renowned American business angels to value the elements that guarantee future success in pre-revenues, early stage companies Future cash flows DCF with Long Term Growth…

How Do Investors Value A Startup?

Valuing companies is tricky. The methods used to value a company are dependent on the stage of development of the startup. Coming up with the price for early-stage startups is particularly difficult because they have little-to-no track record. So here comes the question:  How do angel investors value a startup? If you are in this sector, you have probably heard quite often that:……

The Discount Rate in Startup Valuation

If you approach a Venture Capitalist or a Business Angel, you will probably hear that “I need to be compensated for the risk I'm taking” or “I want a larger return than that”. But, what does it mean? What’s the link between discount rate and required return and how it is related with the amount of equity you will have to grant them to seal the deal? The value of one euro today is not…

Parameters Update P5.0 – Methods weights, average valuations and VC method discount rates

On June 25th, 2018 you'll be upgraded to the latest version of Equidam with updated valuation parameters. This may result, on average, in a valuation increase. What's changing 1 | Weights of the 5 methods on the final valuation We adjusted the weights we apply to each method to compute the final average valuation. They are tailored to each development stage, in order to use the most…

Why isn’t asset based valuation for startups?

Many entrepreneurs have the misconception that the value of their businesses is the sum of their parts e.g. assets minus liabilities. The value of an early stage 3D printing startup that owns one machine worth $2M and has outstanding debt for $0.5M seems to be the acquisition price of the asset minus the outstanding debt, or $1.5M. In the financial jargon we call this approach the asset-based…

Pricing

PRICING AT YOUROWN LENGTH! Set the price based on how long you plan to use Equidam and benefit from a simple, one-time payment pricing. JTNDaWZyYW1lJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZhcHAuZXF1aWRhbS5jb20lMkZ3b3JkcHJlc3MtZXh0cmElMkZwcmljaW5nLXdpZGdldC12ZGElMkYlMjIlMjBpZCUzRCUyMmVxLXByaWNpbmctaWZyYW1lLXZkYSUyMiUyMHNjcm9sbGluZyUzRCUyMm5vJTIyJTNFJTNDJTJGaWZyYW1lJTNF Valuing multiple…

Valuation Multiples: Why Do We Use Them & How [Video]

Multiples is a term widely used in lots of valuation theories. But why do we use valuation multiples? We assume that a peer group of comparable firms for which the market value is available can be used as a proxy for the valuation of the company we are evaluating right now. The multiple is a ratio, composed of two variables. In the numerator you have the valuation and in the denominator…

An Angel Investor And Economist On Dilution

There are two statements in general you can hear out there related to dilution: Future rounds are going to dilute my participation so you should allow me a larger share now to prevent this from happening! Cash is neutral; you are diluted in terms of control, but if you'd like to avoid dilution you can either buy more shares now or in future rounds The first statement was offered by an angel…