From Concept to Wall Street: A Complete Guide to Entrepreneurship and Venture Capital

Chapter 9. Valuation of Companies

INTRODUCTION

The company recruits employees, calculates the feasibility of projects, and raises capital and debt in consideration of the company's value and the value of its growth opportunities, and hence valuating a company has a crucial impact on the venture development.

Market price can provide a basis for valuing public companies. The valuation of private companies, however—particularly startups—is more complicated. The main reason for this is that startups are plagued by more uncertainties: By definition, startups are in an earlier phase of their life cycle than are public companies, and therefore the uncertainties clouding the technological feasibility and managerial abilities of the companies and the existence ...