Startup Funding Espresso -- Venture Capital Method for Valuation

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The Venture Capital method of valuation uses a discounted cash flow combined with a multiples-based valuation. 

The valuation takes into account cash flows in a best case, medium case, and worst-case scenario.

It then uses an industry multiple to set the anticipated sell price.

The cash flows and exit price are discounted giving three valuations - one for each scenario. 

Then each one is assigned a probability giving the final value with a probability-weighted sum of the three.

This method works well for growth companies and is better than a straight discounted cash flow because it factors in multiple scenarios. 


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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