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?
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