{"id":5604,"date":"2021-03-15T19:29:14","date_gmt":"2021-03-15T19:29:14","guid":{"rendered":"http:\/\/cfostartup.la\/wp\/?p=5604"},"modified":"2021-03-15T19:38:24","modified_gmt":"2021-03-15T19:38:24","slug":"how-to-value-your-startup-for-investors","status":"publish","type":"post","link":"https:\/\/cfostartup.la\/en\/how-to-value-your-startup-for-investors\/","title":{"rendered":"HOW TO VALUE YOUR STARTUP FOR INVESTORS"},"content":{"rendered":"<p>Specifically, <strong>the word \u201cvalue\u201d acquires a new layer of meaning and must be understood beyond its financial aspects: the entrepreneurial team and the degree of innovation in the technology used are subjective assets.<\/strong><\/p>\n\n\n\n<p>However, let us not be fooled. Even though we are talking about new companies, the analysis and application of traditional methodologies provide solid metrics that attract investors and are useful when dealing with other less certain metrics. One of the most recurring financial indicators to know a company\u2019s value is <strong>EBITDA<\/strong> <em>(Earnings Before Interest, Taxes, Depreciation and Amortization)<\/em>, which consists in calculating \u2014 as evidenced by its name \u2014 the earnings before interests, taxes, depreciation and amortization.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>6 Items that Will Affect the Value of Your Company<\/strong><\/h3>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Market size<\/strong><\/h3>\n\n\n\n<p>This indicator may justify higher valuations because an investor will be willing to take a bigger risk if the market size suggests that potential earnings in the future are worthwhile. Considered together with this are customer acquisition, retention and monetization, used specially in non-traditional valuation methods.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Revenue<\/strong><\/h3>\n\n\n\n<p>Obtaining revenue from the beginning shows a business\u2019s sales capacity and evidences the existing demand in the market. This valuation method provides the best picture of the free cash flow and how that metric will generate an incremental value for the buyer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Monthly growth<\/strong><\/h3>\n\n\n\n<p>This metric can be used both for revenue and for startups with subscription or SaaS (Software as a Service) models. Although this is not necessarily the case with every SaaS company, projects are expected to show a steady 20% intermonth growth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Active users<\/strong><\/h3>\n\n\n\n<p>This indicator depends on the type of product or service, but, in general terms, \u201cactive users\u201d are paying customers, not only because they represent the company\u2019s revenues, but because they show their degree of commitment and the rising or declining trend for future revenues.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Team<\/strong><\/h3>\n\n\n\n<p>This is one of the subjective assets of your business. It measures your team members\u2019 expertise (education and experience) and, above all, attitude (the entrepreneurial nature of these people which will determine a company\u2019s capacity to penetrate the market). Here, it is important to show a track record of enterprise, failure and attempt. Above all, show your capacity for resilience, perseverance and vision.<\/p>\n\n\n\n<p>Notwithstanding, since this may be problematic for investors with little experience in valuating intangible aspects, it is possible to obtain a purely mathematical valuation based on the market volume that can be gained.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Comparable valuations<\/strong><\/h3>\n\n\n\n<p>An investor willing to contribute capital to the project will probably want to learn about the performance of different companies within the same industry. This means studying the value of other transactions in the industry. In order to do this, the investor will take as a reference the company\u2019s business model, billing figures, operating margin, age and size. A downside to this approach is that a startup\u2019s valuation may change drastically depending on the market conditions.<\/p>","protected":false},"excerpt":{"rendered":"<p>The growing development of startups poses new challenges for investors who are unfamiliar with but interested in these kinds of companies. The particularities of this (now-not-so-new) kind of companies call for new valuation parameters. <\/p>","protected":false},"author":3,"featured_media":5605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"wpupg_custom_link":[],"wpupg_custom_link_behaviour":[],"wpupg_custom_image":[],"wpupg_custom_image_id":[],"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[32,15],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.11 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>HOW TO VALUE YOUR STARTUP FOR INVESTORS - CFOstartup<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cfostartup.la\/en\/how-to-value-your-startup-for-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HOW TO VALUE YOUR STARTUP FOR INVESTORS - CFOstartup\" \/>\n<meta property=\"og:description\" content=\"The growing development of startups poses new challenges for investors who are unfamiliar with but interested in these kinds of companies. 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