Find Your Business Valuation in 6 Easy Steps

Online Learning with Practical Business Case Studies

It is often said that raising capital for a business is all about negotiation. The ensuing negotiation between the founders and investors is all about valuation! But arriving at the right valuation is itself a tactful process that must be understood. There are several techniques to value businesses. The most popular among Venture Capitalists is the Transaction Comparable Method. This FundEnable course is designed to demystify business valuations and enable you to find the valuation of your business in 6 easy steps.

What You Will Learn

The FundEnable Takeaways

The Learning Outcomes & Finding Business Valuation

  • Understand the concept of valuations and the significance of pre and post money valuations

  • Master the transaction comparable method of valuations through business case studies

  • Learn to find the valuation of your business in 6 easy steps

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Get 1 Year Access for INR 1000/- only (T&C Apply)

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Frequently Asked Questions

  • While calculating the valuation of companies basis Transaction Comparable Method, what if there is no comparable or similar business available?

    If you don't find exactly similar companies (Example for Terraman you were able to find Beardo, Ustara, The Man Company, Bombay Shaving Company, etc) you can look for similar business models. Example Whatsapp can be compared with Facebook, Twitter, LinkedIn, etc. All are platforms for the consumption of social media content. If you have a subscription-based business model then look for other businesses offering subscription services. You might not always get exactly similar businesses that are funded. The key here is to look for similar business models.

  • Where do we find similar companies?

    Search on Google. Keep track of your competition. Regularly read content on websites such as VCCircle, YourStory, Inc42, etc that keep giving you updates on funding.

  • Shouldn't outliers be excluded in the calculation of average revenue multiple?

    Yes. Multiples that are too high or too low as compared to the rest in the comparable sheet should be filtered. You can use the Median function in the excel to filter the outliers instead of using Average.

  • Typically how much does an investment banker charge during capital raising?

    Most investment banking firms work on a success fee-based model. They charge 2-5% of the deal value depending upon the transaction size. Lower the funding amount, higher the % success fee, and vice versa. Entrepreneurs should avoid giving a huge fixed upfront fee. The industry works on the success-based model. This means fees are due only once the investment amount is transferred to the company bank account.

  • Why do we focus so much on Revenue Multiple? Why not EBITDA or PAT multiple?

    During the early stages, the company might not have steady-state EBITDA or steady-state PAT. Hence no point in using EBITDA and PAT multiples for companies in the startup stage. Many companies in the startup stage do not have positive EBITDA and PAT. As the company matures, investors start looking at EBITDA multiples. When the company achieves a massive scale (like listed players), PAT multiples, or what we call as PE ratio becomes an important valuation metric. The choice of Revenue, EBITDA, or PAT multiple depends on the stage of the business.

  • What is the minimum revenue level required for approaching investors?

    There is no such minimum threshold. It is different for every investor and every business model.

  • Can you value a company in the ideation stage?

    Valuing a company just basis an idea is tricky. In the next lesson on deal structuring, we have discussed convertible structures where valuation is dependent on future priced rounds or on future revenue. You can go through it for better clarity.

  • Is the excel sheet calculation of multiples enough to convince investors?

    Numbers on excel about valuation are not sacrosanct. Ultimately the multiples and the valuation number are discussed with investor and post negotiation you arrive at the final number. Just because you have arrived at some number basis calculation on excel does not mean that it becomes the valuation.

Terms & Conditions

Kindly download the entire T&C document by clicking here T&C.pdf

It is strongly recommended that users read the T&C document while purchasing the FundEnable Toolkit.

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