Hot answers tagged valuation
12
Congradulations on your successful start-up!
How about between $10-12 million? That is based loosely on a multiplier of the annualized profit after the first quarter.
There are so many variables to consider here that the number above is worth as much as the pixels that were rearranged to convey it to you. Even a little more information about the nature ...
9
There are some ways to try to triangulate on an answer.
Under most circumstances, investors will not dilute the founders below 50%. When investors start owning more then 40-50% of a company, the founders tend to feel like sharecroppers and lose motivation.
Therefore it's pretty safe to assume that the valuation on which those investments were based was ...
9
According to The Wall Street Journal:
"They [Sequoia] asked, ‘If you had more capital, could you get to the future faster?’ [Color founder] Nguyen said. “‘Will $25 million help you get five years into one?’ We were enthusiastic out of our mind to say yes.”
What probably happened here is that Sequoia needs to put large chunks of money to work at a time, ...
8
Make sure you check out Fred Wilson (famous VC, funded Twitter)'s superb advice on the matter in this post of his, which addresses your main question head-on.
It starts with this advice:
1) Don't take money you will never
ever need. No matter what price and
terms the money is offered, it has a
cost. Money is never free. If you have
absolutely ...
7
To value the company you need to look at a variety of things. Generally, a company gets bought for 1) it's technology, 2) it's customers, or 3) it's revenue. ...or some combination of those. The value of your company is what someone is willing to pay for it. So, the value will be different depending on why another company wants to acquire your company.
...
7
To illustrate pre-money and post-money valuations I will use a (very hypothetical) example:
Let's say your startup is worth 100 USD. You compare it against other similar startups, you look at the sales numbers, etc. An investor does the same. After mutual negotiation, you arrive at a valuation of 100 USD, a.k.a. a pre-money valuation of 100 USD.
The ...
7
Ultimately, that is the the single most dangerous flaw all entrepreneurs share - they love the process of creating. For most, market research and validation is something like a bad root canal - I've been there before and guilty as well. The easiest way to validate your idea is to perform a first round of hallway testing:
TALK TO PEOPLE that have no clue ...
5
Generally, the price is whatever the market wil bear - so rather than picking a multiple, I'd recommend looking to find the going rate for similar sized sites, and then determine if there are extenuating circumstances (which would modify the price).
Check out Flippa (the site formerly known as SitePoint's market place). It's a website dedicated to the ...
5
Here are a couple of metrics people use for evaluations:
1x Yearly Revenue: If it's a brick and mortar type place with slow growth. That's kind of your baseline.
Money In: Again, a baseline. You don't want to go below this if it's a growing business.
7x Yearly Profit: You can also do some projections for 2, 3 and 5 years out and use the range. Typically, ...
5
Honestly, your posts has several warning flags in it.
We will raise Series A in 6-8 months from now,
Hmnn, getting a Series A 6-8 months after starting from nothing -- not impossible, but definitely difficult.
when the technology is built, and in beta with few paying customers and gained a bit of traction.
I would suggest to reverse the ...
5
Roughly, it's worth about what someone will pay for it :)
Is your first year number sustainable? Do you think growth would be flat, increasing, or decreasing?
If the company is healthy and there is a clear growth plan, then $10-$12MM valuation is probably a defensible number. If growth is flat, then a $1-$2MM valuation is probably closer to reality. I'm ...
5
You cannot set the value based on pageviews or members. I'd say you need also to consider at least
the business model
the stage of the company (just launched, early stage, mature...)
the cost structure
As an example, let's say you have one million page views per month, and your only possible business model is advertising.
Considering 1% of average click ...
5
Im trying to use that situation as a gauge for how much my site (with similar traffic and similar product ) would be worth.
Pinterest didn't purchase Punchfork primarily because of the number of users.
They purchased it because Punchfork dominated a slice of the same market space as Pinterest (image based curation - in Punchfork's case of recipes). I ...
4
I've looked into selling my business, and while I didn't do it, here's what I learned.
There are two types of buyers for businesses. The first is a financial buyer, the second is a strategic buyer.
The financial buyer is buying your business based on the numbers your business is currently producing. Private equity firms fall into this category. The ...
4
Confused. If you only have an idea, the market valuation doesn't exist. Now, if you have an idea that translates into intellectual property (patent, trademark, copyrights), then you may have something of value. But, better/easier to have a proven customer base, a repeatable business model, and positive cash flow and earnings. Or you could create a ...
4
It is not even possible to guess with the information you have provided. The website could be worth nothing, it could be losing huge amounts of money, or it could be making money.
Funding levels don't translate into value. You can pump millions of dollars into a stupid idea and still have a stupid idea. Or you can put just your own time, effort, and a bit ...
4
Sorry, but your question doesn't make much sense.
First, valuation only matters when you negotiate with potential investors, not customers.
Second, valuation is arrived at by negotiation, based on what the market (one or more investors) are willing to buy shares for, and what you are willing to sell for.
That being said, a technology startup in Silicon ...
4
If you had asked "Should I be acquired or raise money," you'd have a hopeless question there. The only possible answer would be "it depends."
Luckily for you, you asked a different question: if the angel investor's valuation is $5m post, what should be the acquirer's valuation? That's a really interesting theoretical question and one which, I think, I can ...
3
At this point, the company is worth anywhere from the money in ($250k + $7k + $7k = $264k) to maybe 1.5 to 2x that. The reason is simple, the company has no revenue. Without revenue, it's hard to get an evaluation much higher than a couple of times the money in.
The number of shares or percent ownership of the company is a bit tricky. If you are a founder, ...
3
Are you asking for replacement cost, or are you asking to value it as a business? I know little about Drupal and without going through the site, I would guess that if it is fully functional its replacement cost would be a few thousand dollars ($3K - $5K) at best. It's probably worth more as a business, but you would want to have customers on the platform ...
3
I was there about a year ago, it's not a science. It's like business plans you don't know how much profit you going to make but you just throw in some numbers with educated guesses.
A very rough guide to accomplish this:
Make your business plan first
Calculate the sales, expenses, salaries, cost of every little thing and profit
Now divide the profit by 2 ...
3
The easy answer is that unless you have some sort of technology with you, source code or some patents the value is 0,-
I don't think the value of your company is of any importance at this stage.
VC's certainly wont look at that but rather at the potential of the market, how big a share you will potentially be able to get of that market and how you are ...
3
You don't need to be making a profit to evaluate a company. Most startups get evaluated way before they make a profit.
Typically, people use some general rules to gage a companies worth. These include:
10x Money In: Usually, an investor wants at least 10 their money as a return
3-5x Revenue: This can be discounted revenue over time as well.
7x Profit: The ...
3
If your business owns a dollar it didn't have before, it's worth a dollar more.
But you aren't worth any more, because that dollar bought equity: in theory, the value of your holding is just what it was before.
So there are three key factors on the side of taking in money.
First, in the world of startups, value is much less cut-and-dried than in ...
3
Two key questions:
Do you need the money?
Are the terms reasonable for your current investors and you?
If you have a realistic use for the money that will drive revenue and profit faster and the terms do not cause punitive dilution for your existing investors, then yes, take the money.
On the other hand, if you're in a positive cash flow environment and ...
3
There is no one true way, you pretty much have to triangulate it from various standpoints and to get a feel and better understand it yourself.
Market Value. Currently it doesn't have any value besides what someone is are prepared to pay for it.
If someone likes the idea and is prepared to back you then you will need to be able to pay for 1.5 to 2 years ...
3
That would appear to be fairly profitable. Have you considered having someone else run it so that you have a steady income on the side while you pursue something else?
As for selling it:
competitors - always potential buyers
large sites specific to your niche - (assuming you specialize in something like wordpress, drupal, or some other cms)
industry ...
3
I'm in a similar situation. In our case, my business partner and I are working on a B2B application for HR departments. So we've asked our friends to help us out with their opinions (the ones that work in HR) or with contacts.
We offer to buy everyone lunch in exchange for their opinion, especially the people we don't know :)
We ask them general questions ...
3
Your question suggests that there is some confusion between "investment" vs "loan" and "sales commission / brokerage fees".
Either he's going to invest in your company - an amount of money in exchange for a percentage of equity. This is a long term move and the investor shouldn't expect quick wins.
or he's going to loan you the money, against a set of ...
2
At the end of the day an experienced buyer will look at the total profit (via the EBITDA) the site can make for the next three or so years (after that it's all a guess anyway) and base a valuation on that.
If you can successfully defend the 4-months history and show how "it will continue and/or increase for the for seeable future" then you'll be a valuable ...
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