Tech Start-up valuation method - question
Hi everybody.
I am trying to solve a business case and I came across what seems to be a very odd valuation method that I need to use. I simply can't understand how I can use it in a logical way. Can any of you make sense of it? Thanks a lot.
There are 3 major factors that influence the valuation with different weights as described below:
- 50% of the valuation multiple is dependent on revenues
- 25% is dependent on the company growth.
- 25% is dependent on the market factors.
To offer a bit more background, the company is offering a SaaS B2B solution, had revenues of 100K for the year, has a current valuation of 2M and received seed funding of 400K. The target would be to increase the valuation for the next 6 months by 50% and my task would be to show how it could be done. The issue I am having is with the method of valuation.
Any help would be much appreciated.
Thank you
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