Fri, 5 February 2021
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.
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Category:general -- posted at: 7:00am CST