Entrepreneurs need to put a value on their start-ups in order to raise money, and investors need to put a value on their investments to ensure an adequate return on investment. No negotiating item between entrepreneur and investor creates a wider gulf than this one. The two parties may agree on every other point but will have diametrically opposing views on what the start-up is worth and how much equity the investor should receive in exchange for his capital.
Valuation is challenging for a start-up. Since young businesses take time to become profitable, the trick of valuing start-ups is to focus on the future. If you want your start-up to be a masterpiece, you’ll need to use the right side of your brain as much as your left to determine value.
Is business valuation art or science? Is it possible to place a credible valuation on a Start-up? What is Pre-money valuation? What is Post-money valuation? How much your company worth? Are you really worth anything until you’re profitable? How to value your start-up for a VC? What are the Start-up valuation methods?
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