What valuation methods work best for your start-up?

A more detailed approach on how startups can effectively select and apply niche-specific multiples would be beneficial. Considering the diverse characteristics and business models of startups, a deeper analysis on choosing appropriate multiples could clarify the applicability and accuracy of this methodology. For instance, detailing how technology, healthcare, or e-commerce startups should pick their multiples based on factors such as growth rate, development stage, and sector-specific comparables. This detailed insight would help entrepreneurs better understand how to tailor multiples so that they more accurately reflect their companies' values.

Always retain the valuation services of a third-party to provide the best-in-class valuation for your business. Use this report in negotiating with investors it shows you did your homework and are not guessing. Don't do it yourself. This is the work of an amateur.

Market-based methods are advantageous for founders, especially during a growing bull market. A notable example is the success of e-grocery companies amid the pandemic; for instance, Gorillas achieved unicorn status in less than a year. Additionally, these methods are effective in trendy industries like crypto in the late 2010s.

O melhor parâmetro para saber o valor de uma empresa é utilizar o método de transações precedentes. Basicamente, você vai analisar empresas que sejam semelhantes a startup que está analisando e observar o seu múltiplo, seja de receita ou de EBITDA. Com base nisso, você já consegue estimar o valor de mercado da sua empresa. É claro que essa visão ainda precisa ser complementada com a utilização de outros métodos, mas é uma boa percepção de quanto estão pagando por uma startup.

DCF analysis should be calculated for different scenarios (base case, optimistic case and pessimistic case) to give a clear insight of the valuation spectrum.

DCF is unlikely to be a useful for start-ups considering the first years are loss making. Valuing start-ups would require to take into account external factors and therefore looking at comparable multiple would make more sense as it would capture some of those external factors.

Income-based methods are beneficial for founders during a recession or bear market. If you've identified the most effective way to sell certain services online with a 60% EBITDA, go ahead and use this method. Great job!

O fluxo de caixa descontado é de longe o maior método de avaliação de empresas e pode ser muito bem utilizados para startups. O grande ponto aqui é que as startups pode optar por não ter lucro nos primeiros anos e isso deve ser incorporado na análise do fluxo de caixa descontado. Como toda empresa tem como objetivo gerar lucro, essa metodologia pode ser aplicada a qualquer tipo de empresas, mas é importante entender que a startups possuem estratégicas que podem impactar nesse cálculo.

Esse tipo de método acaba tendo menos peso em uma análise de startups, pois excluem os fatores qualitativos. Quando você olha apenas o valor patrimonial, por exemplo, você está deixando de lado a experiência dos fundadores, o grau de inovação que trouxeram ao mercado e o potencial de crescimento futuro.

Business = Finance = Profits Determining a company's value ideally involves calculating the present value of future cash flows using the DCF model. However, precise predictions are challenging, leading to the popularization of the market multiples method. While utilizing net profit as a basis for these multiples would ideally offer the most accurate representation of a company's value, it is not always possible, particularly for businesses that have yet to achieve profitability. Consequently, analysts often resort to other financial metrics found in the income statement, including EBITDA, EBIT, revenue, or sometimes GMV, to estimate a company's value. This adaptability has cemented the multiples method as a prevalent tool in valuation.

Make this decision based on what stage of company you are. If you're a prerevenue startup, dont even think about dicounted cash flows. From seed to series A you will mostly be using a comparable method and thinking about revenue multiples. Find a comparable company. Compare what they sold for or their market value. Then find their revenue for the same year. That will give you a valuation multiple. Then look at your projections in the year you will sell the business. Multiple that revenue by the valuation multiple and you have a defensible valuation. 🙌🏻

O ideal é não escolher apenas um método e sim fazer de 2 a 4 metodologias de avaliação. Cada método de avaliação vai analisar a empresa por ângulos diferentes e analisar apenas com um método vai trazer um grande viés na análise. Para startups, recomedo utilizar os métodos de transações precendentes, múltiplos de mercado, venture capital e fluxo de caixa descontado.

Another relevant perspective is considering the impact of environmental, social, and governance (ESG) metrics on startup valuations. With investors' growing focus on sustainability and corporate responsibility, incorporating ESG metrics as part of the valuation could not only enhance the perceived value of the startup but also align its goals with global expectations of sustainable development. Discussing how these criteria can be integrated into existing valuation methods would offer a contemporary view on how startups can stand out in an increasingly conscious investment ecosystem.

The growth prospect and ability of the team to execute are just as important if not more so than past performance in determining the valuation of your business. Some metrics are easy to measure and some can be very difficult until investors meet. It's key you have done the research into the market and understand how bog your company could actually get and what return on investment could be provided when deciding on your valuation. Be optimistic but sensible.

É importante sempre contratar um especialista para realizar a avaliação da sua startup. Quando você mesmo faz o seu valuation, é bem provável que vá colocar um grande viés. Os empreendedores sempre acham que a sua empres vale mais do que realmente vale. Um consultor externo vai cortar esse viés.

For our tech startup, we primarily utilize the Discounted Cash Flow and Comparables methods for valuation. The DCF approach helps us project and discount future cash flows to their present value, reflecting our specific growth potential and risk. Meanwhile, the Comps method compares us with similar businesses, providing a market-driven perspective. Combining these techniques offers a comprehensive valuation, balancing our internal financial projections with external market realities. This approach supports clear communication with investors and stakeholders about our worth and growth prospects.