Market-Based Valuations

Many factors weigh on the valuation of a company, and for sure there are no two businesses alike. Furthermore, even similar companies find themselves at different stages of their lives when they start talking with investors and buyers: some are consolidating while others are expanding; some are profitable right away and others are not for a long time; some are not even generating revenues when they are acquired.

But a very effective way to monitor the market (albeit quite simplistic) is to benchmark the M&A activity in a specific sector and in a given period. Markets go through different phases after all and there might be more or less appetite for companies like yours, and therefore investors might be inclined to accept higher or lower valuations.

Solo Founders: Myths and Legends

When you’re setting out into the world of business, some widely accepted wisdom states that you need a business partner. After all, starting a company is tough, and you need all the help you can get, right?
However, that’s not really true…
Having a co-founder helps in many ways, but you also have the option of doing it alone.

THE CHECKLIST VALUATION METHOD

The Checklist method compares early-stage startups within the same geographical market, taking as highest value the highest valuations in the market, with the exclusion of outliers and notable “crazy” exceptions.

After gathering this local data you are left with a maximum pre-money valuation and you will discount this valuation by the quality of the criteria assessed. In other words, it’s impossible to end up with a valuation higher than this maximum benchmark.

Valuation: Qualitative Methods

When looking at early-stage valuations, our favourite approach is to rely on benchmarks from the market and then compare them with the start-up we are valuing. We normally arrive at a final value by using two different methods: the ‘scorecard’ and the ‘checklist’ methods…

Investment scams: five red flags to look for

The digital age has made it much easier for cowboys to create convincing profiles online to extort young businesses… but with a good understanding of some common red flags, you can be confident that you are working only with legitimate potential investors.

EU Trademark Swindle

This is a horror story with a happy ending. It’s a story about dubious marketing practices and fully fledged scams. Be prepared: in this article we will name names, in order to expose what we think is a quick cash-grabbing scheme.

Disclaimer Template

Whilst it is obviously important for the deck to include a persuasive pitch for investment, it’s also vitally important that you include a disclaimer to protect yourself from any legal action further down the line.

The Scorecard Valuation Method

Have you heard about the Scorecard Valuation Method? It is a way of determining the value of a startup and can be seen as particularly useful by pre-seed and seed-stage investors.

The Abu Dhabi Investment Scam

It recently happened to one of our clients: their company is UK based, with no operations or interests in the UAE – they are fundraising and this investor contacted them out of the blue with a tempting message…

Who Decides Your Company’s Value?

In the past weeks we have established why valuations are helpful, when it makes sense to get your venture evaluated and what are the most common valuation methods for revenue generating companies and early-stage startups.

101 Startup Stages

The startup life cycle has 6 stages, no wait 5, no, another website said 7 stages and then if you actually read The Lean Startup by Eric Ries then you will have read that there are 3 startup stages.

Let’s face it, it doesn’t really matter how many stages there are, as long as you understand the steps involved you will be able to figure out where you are at and what the next steps on your growth path are.

Early Stage Valuations

The question is: how can we evaluate the startup if we have not yet reached the stage where recurring revenues are the norm?

Fundraising 101

Managing to raise capital is rarely easy, and can prove to be an uphill battle, even at the best of times. This is the case even though you have a stellar idea and your business is performing in the marketplace.

Business Valuation For Beginners

In order for an investor to gauge how much they are willing to invest in any business, no matter the stage, they would need to know what the market value is of the business they are considering investing in.

NDA Template

WHEN AN INVESTOR SHOULD SIGN ONE?
If you think you have a special idea and you are scared somebody could steal it from you, think again… Many people have the same ideas at the same time, but the difference is all in the execution!

Not What But How

WHY COMES FIRST BUT DON’T FORGET HOW!
Everything starts with “why”, we can probably all agree on that.

Values First – ESG Later

THE IMPORTANCE OF BEING EARNEST

Environmental, Social, and Governance (ESG) criteria are an almost mandatory aspect of today’s investment markets. But is this a fad?

Lehman Scale

LEHMAN FORMULA
So, let’s address the elephant in the room first: the Lehman Scale takes its name from the infamous Lehman Brothers that developed this method in the late 1960s to bring under control and standardise the market of private bankers’ finders fee.

Funders’ Dilution

It’s important to plan ahead and have your exit strategy clear from the start. What do you want to do with your life and your company? And how much of it should you give to investors in order to see new equity flowing into the business, propelling you towards the next stage of expansion?

The Trinity of Management

WE ARE MAKERS, MARKETERS AND MANAGERS
We believe that in order to deliver amazing results a company must excel at 3 things

DCF Valuation Template

This Discounted Cash Flows technique involves deriving the value of a business by calculating the present value of its expected future cash flows. Projected cash flows, inferred from the Business Plan, are used for the five years ahead while the Terminal Value is adopted for the remaining foreseeable future.

Valuation

How to value my company? Sure, you want to minimize the number of shares you will eventually give to investors, but you don’t want to scare them off as well. Above all being reasonable is the key when it comes to valuing your own company…
But first, let’s talk about the theories behind assets valuation.

What Really Matters

OUR MANIFESTO: The world advances thanks to the effort of single brave individuals that innovate starting from zero. All successful companies become institutions sooner or later, and loose the ability to change and fuel progress. And the advancement of our human race is left in the capable hands of Founders and Entrepreneurs.

Investment Process

Closing an investment is something that could theoretically take less than a month, but this almost never happens. Normally six months is a good ballpark to start preparing your agenda, but what can you expect from this process?