3.3 VC KPIs and Valuation

Question 1

What makes valuation of an early stage startup a challenge?
1. Lack of information/data ->
2. Small to nonexistent past ->
3. no revenues ->

Answer 1

Multiples for some industries might not be available; no idea about product/service viability

no clear idea of sustainable EBIT/EBITDA levels

negative cash flows and operating losses

Question 2

What’s the method for valuing early stage companies? (prior to financing)

1. Future value of company
2. Pre and post money present value of company
3. …
4. …

Answer 2

3. VC share ownership calculation
4. Future dilution compensation