Fwd: [bits2startup] Startup valuation methods

[Mridula Goel]

a student is working on this area with me, for those of you have started up can u please oblige

thanks

mridula 

---------- Forwarded message ----------
From: Radhika Parik <radhik...@gmail.com>
Date: Mon, Nov 18, 2013 at 1:28 PM
Subject: Re: [bits2startup] Startup valuation methods
To: Mridula Goel <mri...@goa.bits-pilani.ac.in>

Ma'am

Here is the link to the survey form-https://docs.google.com/forms/d/13boZVAyY-1Cn51UmVEW0IwgmxCQcSlPBEPjeXG2Glms/viewform.

Yours sincerely

On Fri, Nov 15, 2013 at 12:33 PM, Mridula Goel <mri...@goa.bits-pilani.ac.in> wrote:

---------- Forwarded message ----------
From: Mridula Goel <mri...@goa.bits-pilani.ac.in>
Date: Wed, Nov 13, 2013 at 11:16 AM
Subject: Fwd: [bits2startup] Startup valuation methods
To: Jill Atul Shah <f201...@goa.bits-pilani.ac.in>

---------- Forwarded message ----------
From: Mridula Goel <mrid...@gmail.com>

Date: Sun, Nov 10, 2013 at 4:43 PM
Subject: Fwd: [bits2startup] Startup valuation methods

To: Mridula Goel <mrid...@gmail.com>, mri...@goa.bits-pilani.ac.in

---------- Forwarded message ----------
From: Rishabh Kaul <risha...@gmail.com>
Date: Fri, Sep 20, 2013 at 10:18 PM
Subject: Re: [bits2startup] Startup valuation methods

To: "bits2s...@googlegroups.com" <bits2s...@googlegroups.com>

No frameworks as such, the ones which are there are either flaky or at best case by case. Comes down to who wants the other party more :)

But jokes aside, broadly, mostly its of two types:

1) It's either a standard number, for a fixed investment, say an incubator/angel will say 5-10% (sometimes more) for 10-20 Lacs. The reasoning is that at this time (e.g when you don't have a product ready ready), talking valuation is just a worthless exercise.

2) Comparables (which are the other companies in this space, the important thing here is which of them are similar, so a high end SaaS company will not be compared to a fashion ecomm). In these exercises, they will look at what your revenue multiple is, or your 12 month projected revenue is, and then take a revenue multiple on that. In case of product companies, where there is no forseaable revenue for a while, they might prefer going for convertible structures or performance based conversions (despite giving you an initial valuation). 

VCs also work backwards, how much return do they want, what is the probability of getting there, how much capital will you need for that, and based on that, what should your current valuation be to reach those numbers.

Again, these are for tech startups. Other industries, with different sales, cash cycles might be different, because in the long term, finally what matters for the investor is much profit is the company going to make (revenues and all that are proxies for it). 

best,

Rishabh

On Sat, Sep 21, 2013 at 3:23 PM, Prashant Singh <prasha...@gmail.com> wrote:

Hi,

     What are the possible methods to value startups, specifically tech startups? 

 If anybody has a template for the same, it would be really helpful.  

Regards,

Prashant

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Radhika Parik

Birla Institute of Technology and Science,Pilani

K.K Birla Goa Campus

BE(Hons.) Computer Science

MSc.(Hons.) Economics