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How startup valuation works

How startup valuation works. How startup valuation works. Early Stage. Growth / scaling Stage. Exit Stage. Early stage. “Valuation” does not show the true value of the company It shows how much the company investor gets for her money

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How startup valuation works

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  1. How startup valuation works

  2. How startup valuation works Early Stage Growth / scaling Stage Exit Stage

  3. Early stage • “Valuation” does not show the true value of the company • It shows how much the company investor gets for her money • Founders with success in the past tend to get higher valuations (they give up less of the company in early stage than first-timers)

  4. Early stage • Valuation depends on how much money you need • You need ENOUGH money to • Run 3 experiments and • Have at least 6 months of runway • Investors want to see growth within 18 months

  5. Early stage • Valuation depends on who you take money from

  6. Scaling stage • Investors find similar companies to determine their value to revenues ratio – then use it to calculate value of your company • Revenueoc/valuationoc ~ Revenueyou/valuation? • Take revenues this month, year, next year • Calculate best, worst, and base cases • Triangulate 3 cases • Project when startup will exit • Discount earnings by time value of money

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