|
Valuation of
start-up companies is highly subjective. It is rather art than science.
Proper valuation of the
entrepreneurial business is the seminal event in the corporate maturation
process however and it becomes an absolute requisite when the entrepreneur wants
to raise private or public capital. Once the company is properly valued, then
the
entrepreneur
can determine how much of the company can be sold for the capital injection
provided by the
investor or
venture capitalist.
Venture
Financing Funnel
Venture
Financing: Key Documents
No matter how enthusiastic
each party seems, it always comes down to valuation.
The most common start-up
business valuation
approaches include:
-
Cost approach (uses the
valuation information to restate the asset at fair market value)
-
Market approach (gathering
data to value developing assets; uses actual market derived data, comparing
and correlating subject company to market comparable)
-
Income approach (connects
data to value of developing assets).
|
