Comments on: The Entrepreneur’s Guide To Venture Capital – Part 10 http://www.youngentrepreneur.com/blog/uncategorized-blog/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/ Young Entrepreneur Forums - your online discussion forum to share and talk about Entrepreneurship. A place to learn and to help others with starting, managing and growing successful business ventures. Thu, 09 Feb 2012 11:43:00 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Todd http://www.youngentrepreneur.com/blog/uncategorized-blog/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/comment-page-1/#comment-2550 Todd Fri, 23 Jan 2009 23:52:55 +0000 http://www.youngentrepreneur.com/blog/2008/01/02/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/#comment-2550 Just finished with the whole series here. Great stuff! (Even though I need to do some accounting homework before I can fully digest the valuation above.) Thanks for bringing all the links together under one post. Just finished with the whole series here. Great stuff! (Even though I need to do some accounting homework before I can fully digest the valuation above.)

Thanks for bringing all the links together under one post.

]]> By: Aleksandar M. Velkoski http://www.youngentrepreneur.com/blog/uncategorized-blog/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/comment-page-1/#comment-2549 Aleksandar M. Velkoski Sat, 03 Jan 2009 16:00:43 +0000 http://www.youngentrepreneur.com/blog/2008/01/02/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/#comment-2549 Nice post - and excellent response from Marty. Thanks for your contributions. Nice post – and excellent response from Marty. Thanks for your contributions.

]]> By: Martin Zwilling http://www.youngentrepreneur.com/blog/uncategorized-blog/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/comment-page-1/#comment-2548 Martin Zwilling Fri, 02 Jan 2009 20:29:24 +0000 http://www.youngentrepreneur.com/blog/2008/01/02/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/#comment-2548 Your example is one good approach, but in my experience in the investor community, I found several additional techniques and rules of thumb which are useful in early stage valuations. I recently published an article on my website summarizing these, called "Ten Top Techniques for Startup Valuation". If interested, you can see the whole article on www.startupprofessionals.com, but here are the ten bullets: 1. Place a fair market value on all physical assets (asset approach) 2. Assign real value to intellectual property 3. All principals and employees add value 4. Early customers and contracts in progress add value 5. Use discounted cash flow (DCF) on revenue projections (your example) 6. Multiple of discretionary earnings (earnings multiple approach) 7. Calculate replacement cost for key assets (cost approach) 8. Find “comparables” who have received financing (market approach) 9. Look at the size of the market, and the growth projections for your sector 10. Assess the number of direct competitors and barriers to entry In summary, there is both art and science to startup valuations, so the more you know, the more you can maximize your valuation. Marty Zwilling CEO, Startup Professionals, Inc. Your example is one good approach, but in my experience in the investor community, I found several additional techniques and rules of thumb which are useful in early stage valuations. I recently published an article on my website summarizing these, called “Ten Top Techniques for Startup Valuation”.

If interested, you can see the whole article on http://www.startupprofessionals.com, but here are the ten bullets:
1. Place a fair market value on all physical assets (asset approach)
2. Assign real value to intellectual property
3. All principals and employees add value
4. Early customers and contracts in progress add value
5. Use discounted cash flow (DCF) on revenue projections (your example)
6. Multiple of discretionary earnings (earnings multiple approach)
7. Calculate replacement cost for key assets (cost approach)
8. Find “comparables” who have received financing (market approach)
9. Look at the size of the market, and the growth projections for your sector
10. Assess the number of direct competitors and barriers to entry

In summary, there is both art and science to startup valuations, so the more you know, the more you can maximize your valuation.

Marty Zwilling
CEO, Startup Professionals, Inc.

]]> By: Posts about Investors in Startups as of January 2, 2009 | The Lessnau Lounge http://www.youngentrepreneur.com/blog/uncategorized-blog/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/comment-page-1/#comment-2547 Posts about Investors in Startups as of January 2, 2009 | The Lessnau Lounge Fri, 02 Jan 2009 20:00:00 +0000 http://www.youngentrepreneur.com/blog/2008/01/02/the-entrepreneur%e2%80%99s-guide-to-venture-capital-part-10/#comment-2547 [...] [...] [...] [...]

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