I’ve seen this problem for decades. And up close and personal when it came to the difference between the founders and the VCs when it came to valuing my startups.
Yes, there are all kinds of present value models you can run on a post-launch, revenue-generating company. And being about as far from a finance guy as you can get I haven’t spent much time with them. My advice to founders is generally the same advice my real estate agent gave to me: rely on comparables. But comparables for startups can be much harder to find than those for houses. Even so, pricing for houses can be just as contentious as pricing of companies, though in real estate it’s between owners and realtors, in startups it can be between owners and owners. Lots bloodier!
With that very brief preamble I’m going to attach a PowerPoint startup valuation model that is the best tool I’ve seen. It is courtesy of a fellow mentor, James G. Wilson, CEO of Zeabio, who shared this with us at a Post-Doctoral Students Association mentoring meeting.
In true mentoring fashion of the five slides two of them Questions, Capital, Valuations and Risks and Expectations, lead with questions.
Like any good model it’s no better than its assumptions and it’s up to you to input those assumptions, they don’t come pre-packaged with the presentation.
Couple use of this model with good research into comparables and you will at least have a head start on the startup valuation task. Good luck!