Valuation Estimator

Last week I attended a course run by Bill Payne from the Kauffman Foundation on valuation and portfolio strategies. It was a terrific session. I particularly liked the activity related to early stage valuation.

Bill introduced us to a web based questionnaire created (and owned) by Cayenne Consulting. This valuation estimator asks 25 questions to help assess your pre-money valuation prior to having a conversation with a VC. Valuing a startup is intrinsically different from valuing established companies. Because of the high level of risk and often little or no revenues, traditional quantitative valuation methods like P/E comparables or discounting free cash flows are of little use. Startup valuations are largely determined based on qualitative attributes.

This is not a bullet proof process but it provides some context to a valuation discussion. You can complete the questionnaire by clicking here here. Enjoy!