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7 Valuation Methods

Credit to Bojan Radojicicย who nailed it.

๐—ฆ๐˜๐—ฎ๐—ฟ๐˜๐˜‚๐—ฝ ๐—ณ๐—ผ๐˜‚๐—ป๐—ฑ๐—ฒ๐—ฟ๐˜€: fueled by passion, innovation, and big dreams.


But amidst all the creativity and enthusiasm, there's a critical aspect that often takes center stage:


Startup Valuation! ๐Ÿ’ผ

Understanding the value of a startup is more than just a number.


It's a strategic compass that guides your fundraising efforts, informs investment decisions, and shapes your company's trajectory.


Here's why startup valuation is a crucial piece of the puzzle:

1๏ธโƒฃ Fundraising and Investment Decisions

2๏ธโƒฃ Equity Allocation and Employee Incentives

3๏ธโƒฃ Strategic Growth Planning

4๏ธโƒฃ Acquisitions and Partnerships


Why do you need these 7 models?

ย ๐Ÿ”น ๐—ง๐—ถ๐—บ๐—ฒ-๐—ฆ๐—ฎ๐˜ƒ๐—ถ๐—ป๐—ด ๐—ฎ๐—ป๐—ฑ ๐—จ๐˜€๐—ฒ๐—ฟ-๐—™๐—ฟ๐—ถ๐—ฒ๐—ป๐—ฑ๐—น๐˜†

Valuation calculators streamline the valuation process, saving you valuable time and effort.ย 

ย ๐Ÿ”น ๐——๐—ฎ๐˜๐—ฎ-๐——๐—ฟ๐—ถ๐˜ƒ๐—ฒ๐—ป ๐——๐—ฒ๐—ฐ๐—ถ๐˜€๐—ถ๐—ผ๐—ป ๐— ๐—ฎ๐—ธ๐—ถ๐—ป๐—ด:ย 

These calculators are built on robust algorithms, taking into account critical financial data. This helps you to avoid guesswork and bias.

ย ๐Ÿ”น ๐—˜๐—ฑ๐˜‚๐—ฐ๐—ฎ๐˜๐—ถ๐—ผ๐—ป๐—ฎ๐—น ๐—ง๐—ผ๐—ผ๐—น:ย 

By understanding the factors that influence your startup's value, you'll gain a deeper comprehension of your business's strengths and areas for improvement.

ย ๐Ÿ”น ๐—–๐—ผ๐—ป๐—ณ๐—ถ๐—ฑ๐—ฒ๐—ป๐—ฐ๐—ฒ ๐—ถ๐—ป ๐—ก๐—ฒ๐—ด๐—ผ๐˜๐—ถ๐—ฎ๐˜๐—ถ๐—ผ๐—ป๐˜€: Armed with a well-informed valuation estimate, you can confidently negotiate with investors or potential partners, knowing that your offer is grounded in data and market realities.


7 methods: explanation of when the method is appropriate to use and valuation calculation under given assumptions

ย โ€ข Discounted cash flow method

ย โ€ข Valuation by multiple (EBITDA or Revenue/ARR)

ย โ€ข Comparable companies method

ย โ€ข Replacement cost method

ย โ€ข Net book value method

โ€ข Berkus method

โ€ข Venture capital method


Attaching a nice image by him.



33 Views

This is nice one Ranjan Sir. Very informative and important for early stage founder. I like Venture Capital method for tech and deeptech to get higher valuations. However most revenue based companies will use DCF method

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