Valuing a company with NO revenues

Comparables – if most startups in your industry are valued within a certain price range then that should be the anchoring point for your valuation.

Founding Team – what does the team offer to the company? Many a times companies with founding members with experience in the startup’s industry will command a higher valuation than those who don’t.

Traction and Expected Near-Term Revenues – this is based on the engagement the company has had with its potential target audience for the product or service they are offering. Companies that have worked towards this tend to have a higher valuation than those who don’t.

Growth and Engagement – these are the measures taken to get the product or service to the public. The more proactive the company is in doing this, efficiently, the higher the valuation probability.

Market Size – this is based on the potential users of the proposed product or service. Are the numbers worth while? This is for sustainability of the company’s revenues.

Competition  – this looks at the current and potential competitors and whether the company will efficiently compete.

Market forces – it does not matter if the founders believe that the company is much more than its valuation. If there is a consensus among investors that it is worth X then it is worth X.

Quality of other investors – if the start up has notable investors who not only command market attention but will provide qualitative value to the company then it is possible for the company’s share to sell at a premium.

A valuation is important but an exact valuation isn’t

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