A couple of months ago, Tom Goodwin from Havas Media wrote a notable article for Techrunch. Tom noted: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
Indeed, these online businesses, which also happen to be some of the most successful startups in the digital history with billions of funding and behemoth valuations, have achieved this status due to the way they affect consumer purchase behaviour.
Continue reading God bless the middleman!
Early-stage startup valuation is an important topic for both founders and venture capitalists. On one side entrepreneurs want to receive recognition for their achievements so far, while on the other investors require comprehensive and adequate pricing methodology for pursuing an investment in a particular startup. However, because of the nature of the startup business and the development stage it is at, most founders seeking seed funding from angel investors, venture capitalists, or corporate accelerators struggle determining the right value of their technology venture. In most cases attracting seed funding means that a startup has negative cash flows, does not have revenues (not to mention profits), maybe but rarely possesses intangible assets in the form of an established brand or a patent deterring competition from entering their niche. Thus, using traditional valuation methods (usually in the case of public companies with millions worth of revenues) is especially arduous. As a result, you should use a set of methodologies that are typical for the specific purpose of valuing a deal at the seed stage.
Continue reading Seed-Stage Venture Valuation: Methodological Guide for Valuing a Startup