Entrepreneurship is in the air.
You decided to start your own venture because you have a game-changing idea, a dream to pursue or you just wanted to be your own boss. You now find yourself riddled with questions related to innovation, business, management, growth, funding, leadership and others.
Venture-A-Question is an initiative of the VentureBean Knowledge Hub to answer such questions and more. Your questions will be answered periodically by VentureBean Consultants and our Subject Matter Experts.
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Valuation is based on the financial forecast of a business. One person’s forecast scenario for the start-up may vary from another’s view of the future for the very same start-up. The assumptions Kumar makes may be different from what Sheena may believe in. Hence standardisation is not possible. However, in terms of the process followed, there are a few steps that are standard, such as financial forecasting, valuation calculation based on current market multiples and some standard methods such as discounted cash flow etc. This is followed by negotiation and if all goes well, by deal closure.
As an Entrepreneur:
Set out why you want to value: Is it for one or combination of the following reasons?
Understand the underlying factors in each of the above, which could impact and/or drive the valuation:
This question was sent to us by Lakshmi, Founder, Dekko Digital