In this article, we’ll cover our video walkthrough of Equidam’s startup valuation report in more detail — breaking it down into the key points. We will highlight the important considerations within each section, offering detailed explanations on how these elements collectively contribute to a thorough and equitable valuation process.

Our aim is to provide you with a clear picture of what’s included in the report, and how that reflects on the principles underpinning valuation, ensuring you are well-equipped to interpret and apply the findings effectively.

Introduction to the Report

Equidam’s startup valuation report is designed to provide a comprehensive overview of a company’s value, especially in the early stages. It aims to offer transparency and support fair negotiations between startups and investors. The report includes key company information, financial visualizations, valuation calculations, details of past funding rounds and current shareholders, all presented in a detailed 34-page PDF.

The Key Components of Equidam’s Valuation Reports

  • Key information: This provides a snapshot of the key information about the company and the opportunity in question. It includes key financial data, current ownership, and the valuation itself. Very quickly, readers of the report can get a overview of the opportunity presented and understand the context of the analysis. For investors or acquirers, this allows for quick and efficient screening.
  • Financial data: This includes the company’s projected growth rate, the journey towards profitability, and the projected cash generation potential. From the financial data we collect from startups (past year financials, and a minimum of three years of projections) we visualise revenue and cash growth, produce profit and loss forecasts, cash flow forecasts, and a balance sheet. This gives a full picture of financial health and the future ambition of the company.
  • Valuation methods: Equidam uses a combination of five different valuation methods to provide a holistic view of a startup’s value. The report includes a page for each of the methods, which provides some background on the origin of the method, the perspective it offers on the company value, details of all parameters that are being put to work, and clearly laid-out calculations. A weighted average of these methods is used for the final calculation, with earlier stage companies prioritising qualitative inputs, and later stage companies prioritising quantitative inputs. Read more about this in our full methodology paper.
  • Supplemental information: As well as the obvious information, like company name, address and description, the report also includes details such as the terms of previous funding rounds, the current equity holders and their percentage, and the intended allocation of raised capital (in the case of a funding round). This additional information provides context about the journey of the company up to today, and their growth strategy going forward. Investors can be particularly interested in who else they will be sharing ownership with, and whether or not the founders have retained enough equity to sustain motivation.
  • Benchmarking: Equidam provides a comparison with other companies in the same industry and region, giving context to the valuation and the market position of the company. Of particular note is the benchmarking on revenue and EBITDA growth, which addresses a major pain-point for founders who have difficulty understanding how ambitious their projections may seem. In addition, the benchmarks will show how the startup’s valuation is positioned relative to peers, as well as funding round size and future allocation. It can be interesting to see, for example, how much a startup is allocating to future growth (sales and marketing spend) relative to similar companies. Read more about our benchmarking tool.
  • Appendix: This section provides a detailed list of every parameter that is involved in the valuation, including data sources and the frequency of updates. In addition, it will include details of any adjustments away from the default parameters.

By providing clear snapshots of key financials, ownership, and valuation, both parties can quickly determine if the opportunity is a good fit. Detailed financial projections and diverse valuation methods offer a comprehensive view of the company’s future potential, fostering trust. Clear plans for fund allocation align growth strategies with investor goals, while benchmarking against industry peers provides valuable context for assessing projections. Transparency in all parameters and adjustments ensures confidence in the data presented.

This thorough and open framework supports informed decision-making and constructive dialogue, ultimately leading to mutually beneficial agreements.

The Core Values

Our mission at Equidam is to support fair valuation for innovative young companies, supporting the more efficient allocation of capital and better outcomes for all stakeholders. This is reflected by how we approached determining what goes into the final output, as well as the underlying methodology. Five core values underpin how we approached designing our reports:

  • Transparent and Comprehensive: The reports provide a detailed breakdown of the valuation methods used, the drivers of value, and the financial projections, all of which are explained in a clear and transparent manner.
  • Balanced: By combining multiple valuation methods, the reports provide a balanced view of the company’s value, taking into account both qualitative and quantitative factors.
  • Contextual: The benchmarking and financial projection sections provide valuable context, helping to understand the company’s position within its industry and its potential for future growth.
  • Productive: The report can be used as a tool in negotiations, providing a clear and detailed picture of the company’s value and potential, which can help to facilitate fair and efficient deals.
  • Practical: For investors, the report provides a thorough analysis of a company’s value and potential, which can aid in making informed investment decisions.

By offering a clear and transparent valuation process, Equidam allows both investors and startups to understand the value drivers and assumptions behind a valuation, aligning expectations on the future to enable more productive negotiations and fairer deals.

As a result, capital can be allocated more efficiently to innovative startups, supporting their growth and contributing to a better future.