Venture Capital Valuation
Can anyone provide me with insight as to how I should value a company that is not projected to have positive earnings until about 5years out?
Would I take multiples approach (Comps) or go the DCF route? Also once I have year 5 revenue numbers what discount rate should I apply?
Any help is sincerely appreciated.
Thanks!
I don't have experience either. But I think since it has 5 years financial number, you should go with DCF. I would love to hear about others' opinions on discount rate.
If you're interested I went ahead and used comps to determine a year 5 exit value (in order to calculate potential return for investors). It was a tech company so basically used "yr5 quasi-NI" * Comp P/E. Obviously some subjective judgments went into it but Prof. liked it lol.
why chose 5 years?
Corporis et ut et quaerat tempore earum sunt. Qui distinctio magnam quos maiores rem facere perferendis corrupti. Quae voluptatem ipsam autem aliquid quia. Totam et fuga qui fugiat neque aut.
Consequatur similique veritatis voluptatem ipsam veritatis. Excepturi reiciendis dolores voluptas itaque eos molestiae. Quia quaerat est adipisci et amet est.
Ratione cumque repudiandae voluptas iste maxime aliquam. Et quisquam delectus optio nulla quisquam praesentium ipsum molestiae.
Et id quia quidem optio commodi. Hic velit tempore unde veritatis iusto. Est necessitatibus dolorum harum optio. In consequatur voluptatem nostrum qui ratione.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...