Startup Valuation - A Guide to what your Startup is Worth
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- čas přidán 25. 10. 2021
- In this video, we're going to look at what your startup is worth, your startup valuation. The valuation can be used when you raise money, or an exit, or maybe you just want to know what your Startup is Worth.
We go through 3 startup valuation methods when it comes to funding and exit. The first two are very relevant for early-stage startups and the third is mostly for more mature companies. I will give you very specific methods that you can use to actually set the value of your startup! The methods can be used for all stages - angel, seed, venture, growth, etc.
I’ve done many many rounds of raising money and it is crucial to have some tools that can help you set a - preferably very high valuation. I’ve seen this journey first hand from doing a tiny angel round to raising a mammoth $155 million dollar D round with Vivino. Finding the right valuation is always a challenge, but there are ways to find out the valuation.
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Finally found video which explains exactly what I was looking for and surprised to see it’s not getting traction
I can't believe CZcams took 2 weeks to show me this!! 🤬😤
Simple, crisp and super- useful video, Heini (like always) 👍😊
Thank you very much, glad it was useful!
You deserve my heart and a new subscriber
Thanks, appreciate it!
Love the clarity of your content.
Thanks, glad you liked it!
Thank you! Amazing, very clear and extremely detailed videos. Thanks for all your effort!
Thank you very much, it is appreciated!
For the 1st time ever I able to measure the valuation, thank you for using short simple english & explaining recurrence mean. This save my time! No filler!
Thanks, very pleased to hear it, yes no filter just Raw Startup!
Thanks for providing non-diluted straight to the point content!
After this dose of actionable wisdom I'm back to building something with high growth and high revenue!
Thanks great!
This is the best valuation video on CZcams. Thank you. God Bless. After watching, I could actually produce a valuation I am confident in. Remarkable.
Thanks appreciate it! Really try and make the videos as useful as possible.
Great video, and exactly what i was looking for 👍🏽
Glad I could help
Just found this channel. Super dense and concise info. Thank you!
Thanks for watching!
Very clear! Thank you.
Thanks!
Thank you, You just Helped me find the right Valuation for my startup that is fair for my team too.
Great, glad to be of help!
Excellent video as always. I very much enjoyed the part on the revenue method. Finding the right multiplier is hard, especially for first-time founders. Having a baseline of 25% growth and a range of multipliers above and below that is a huge help. I know that they are not cut in stone, but it's a method that I can use directly on top of my growth metrics 👍
Thanks, yes it will give you some guideline and direction.
useful and concise, thanks
Thanks, yes really trying to keep it simple and precise
Thank you so much for this.
You are so welcome!
Thanks alot. It really helps.
Glad it was helpful
This video is so so good, I like everything about this video from the way of explaining to showing the way with examples & real-life examples were very great. Keep making more of such videos 👍. Just one recommendation you should have explained P/E method more .
Glad it was helpful! And thanks for the feedback!
Always useful
Thanks, appreciate it!
Too the point. Great content
Appreciate it!
Thank you so much ! I just subscribed to your channel :)
Thanks for subbing!
Heini, this is just what I needed-:)
I would love to share my pitch deck with you.
I have a crazy idea. You give young entrepreneurs the opportunity to present their ideas and you offer good critique of their decks.
Just a crazy idea.
Yes but there are only 24 hours in a day!
Great vid❤
Thanks 😁 glad you enjoyed it!
Great video
Thank you!
Good one
Thank you! Cheers!
perfect vid
Thanks, perfect comment!
This was a fantastic informative video! By chance can you make a follow up video discussing how much equity or perhaps royalties you would give away to certain investors or people willing to fund your business and different ways of making deals? For example how you could give up 20% equity for 1 mil in this video or you just give out royalties until you pay off your funder and then you can keep full ownership in your business. Similar to shark tank deals!!! thanks :)
Thanks, good idea, yes very interesting subject I might be able to do a video on that at some point
Best video I have seen on this topic. What would you put as multiplier for an startup power company?
Thanks appreciate it, hard to say from here. Really depends on what type of power, retention and growth etc.
this video awesome
Great, glad you liked it!
Hi,
I would like to ask, if in the evaluation you have to add the price of the platform, do I have add also the rent, the IT equipment, office equipment, 2 employs etc for the next 3-6? months?
Thank you for your videos. I learn something new each time I watch your videos. Also, I am understanding my weaknesses and strengths as I am developing a startup in these days. I want to be ready when I pitch in front of investors.
Can you also please share a video about resilience? I receive some positive and some negative feedback about the idea. I am a realist person as much as I am an idealist person, which means I take the negative feedback very seriously but it doesn’t stop me from what I want to be doing in the end because I believe in it. To be honest, processing it takes too much of my effort and energy. I can be down for a few hours but then I get back up. It is horrible but I can’t control it. What do you recommend?
Thanks, I would say resilience or stamina is really important, but I'm not sure how to give specific advice on how to get it or keep it. Please check this video, it is a subject here czcams.com/video/n-3Bb1ByRa8/video.html
Hey, awesome video! Thanks for this, straight to the point.
I have one question. We've built a platform to educate people with online courses (we have now 25 courses) which people can buy (users buy each course, there's no suscription model). Where would you put this kind of platforms based on the matrix you showed?
Thanks, good question.
It depends a little bit. This is not a subscription so won't get the really high multiplier. It really comes down repeat buys. Are the courses designed for people to buy more and do they actually buy more. If you have a lot of repeat purchases it is almost like a subscription.
Thanks for the video. How to calc the multiplier
You don't really calculate it, you estimate it based on the 'map' that I show in the video
Hmmm I feel like that is a high valuation method for revenue. My clothing brand does 1.4M a year 20% yoy growth and makes $10,000 a month in recurring revenue from our recently launched membership program. It is in a more narrowed niched and not general clothing. Can I use the revenue valuation methods to get a general idea or do you believe there would be a better way such as net income multiples?
It is a great video and content, congrats! But in the Revenue Method I am strugling to explain it in a mathematical way the correct multiplier. If we go from 10x-100x in the top right corner, what would be the criteria or math index to say it is a 15x or a 100x? What scale can I use in Recurrence (x axis) and Growth (y axis)? Years of recurrence and % of growth perhaps?
Everything is very low today, just go sub 10 all depending on the growth!
Nice content. How to valuate mobile game company which do real money games?
Thank you for you content.
I have a question. We have built a platform for crypto world, who can play and earn money(not absolutely same as casino but there are very small things which are similar) and the best feature is that all influencers can monetize their traffic. There is no subscription mode but will earn money from any transaction. Where would you put such a kind of platforms base on the diagram which you showed?
I think somewhere in the middle, not really a subscription, but still you have a distribution channel with all the creators.
Awesome jam, wish to make a video of Indian Jamesbond
Thanks I'm not sure what/who that is
Thank you for sharing these tips! Happy to see your growth in this channel! Maybe we can do a collab in the future?
Thanks, yes, let's keep in touch and maybe we find something fun to do a collab around!
Ok, I built a mobile app that is making $3k per month, from subscriptions, but churn is medium to high, and growing at 15-20% per month, so perhaps a 20x multiplier, 3x12 months = $36k ARR x 20 = $620k. Nice :D
Good day sir. So in a few months time my team and I will start applying for funding from investors, all we have is the MVP and 14 colleges on the waitlist, which equals $1,008,000 in revenue per year when we launch (it’s a subscription based SAAS product) and onboard them properly, do you think we should use the revenue method here? Or maybe we should use the revenue method but reduce the final valuation a bit since we haven’t actually generated the money yet? I’ve been told my someone that although it’s our actual revenue is $0 the colleges on the waitlist will still play a huge role in determining the value.
Please I need your advice.
Thanks ok interesting. Sure you can use the revenue model and the coming revenue as an indicator , but you will have to discount it. It all depends on how firm the revenue is. The thing about revenue is that once it is there it is really valued, but if it is only a promise it really isn't revenue yet
You give very good advice to entrepreneurs. Simply put, based on no BS and easy to understand...you should start a business...🤣
Yes I should! Actually nah, have done enough of that 😎
Hi very good set of videos ❤ them, played most of your videos end to end, just doing some of the numbers based on ur methodology and the number come out very high. I have spoken to a few investors not getting the traction I should. The multipliers for this video are off the charts the USP proposition put to real customers comes back with can I have it now… I just can’t get off the ground. Can’t figure what I am doing wrong 😢
Thanks I do say it a couple of times in the video that valuations are very high right now, meaning a year ago. This turned out to be true, the principles in this video are still solid, but like you say the multiples are very high.
My technology company builds technologies in the renewable space can I use the method for selling the tech a single unit and also use the electricity we supply to the lower grid as recurrence?
Thanks yes if understand the question I think the answer is yes
Thanks for your helpful content. I started a contracting compnay and made some revenue so far, for the fist year I expect a 2 million revenue. which side of growth should I consider if I want to use the multiplier method for valuing the company?
You are probably in the left top corner, high growth, but less reoccurrence
@@RawStartup thanks a lot for your advice. Appreciated!
Fantastic!!! Thank you for posting this. I've been offered to go onto Shark Tank Australia, received a contract from Disney Studios to sign and need to figure out the pitch and the valuation. I'm looking at doing a series of videos about going onto Shark Tank (the production studio has verbally pre-approved). Would you be interested in collaborating?
Very nice video I have a new start up and I need to raise money where and who can do the paperwork for me to show it to investors
Thanks, I would say you need to build a pitch, take a look at my video about building a pitch deck
Do valuations really matter & make difference for VCs in early stage funding? If the company doesnt die & raises next round of funding, there are tons of other clauses like 1x Liq Pref etc that protect the initial investment right? So why overthink valuations?
They always care about valuations for many reasons, but you are right when VC's come in early they care less about it. If they really believe this is a winner it doesn't really matter that you pay a little extra, the important thing it to get the investment.
When we do with P/E method, should we take whole whole profit or last 12 months?
Usually last 12 months, thanks for watching
Very helpful And the CZcams agaretha knows I've been using double surfboard surf in the net on this kind of content and you provide the best Step-by-step So how about this if you have venture capital you know your unicorn start up And it will be much like your company as far as in the top right Box. But my company just has one more extra extra perhaps 2 but 1 is certainly that I'm open opening the marketFor allPeople young and old. On 2 different platformsWhich most definitely will acquireNot to mention I sure would like to use the launch pad perhaps elon musk you could take A-day off. I know what it's like to sleep on the factory floor bud! 😴 lol but anyway thank you for your dedication to put this content out.for smaller town folk...haha
Thank you very much, not sure I understand the question.
@@RawStartup I apologize let me be more clear. My question is...
I am a new startup and I know that I Too also have a company just like yours obviously another industry but Going into a startup knowing your unicorn what is the best way to navigate. Foreign investors I have silicon Valley investor. However I'm struggling for How to secure the loan with him. What is your Advice on Being able to get the money together to be able to pay for escrow on venture capital lone ?
🔥🔥🔥🔥🔥
Hi , Heini . Daniel long-time follower, almost 2 years.
Thank you Daniel, I need to make more videos for long-time followers like you!
@@RawStartup actually . Based on your principle we are building a startup in London. Ultimate wish : Have you as an advisory board 💙
Zachariaa let's get it heini NO SLEEP
Work hard, but a good night's sleep is very important for good performance!
Hi! Getting into a new industry to create a startup, don’t have co-founder, don’t want one.
I understand the importance of a team but I’d rather hire the next best thing after the title of a co-founder
Would this impact me negatively in my pitch to investors? Any advice?
Thanks, well startups come in all shapes and sizes, but the numbers do show that Startups with more than one Founder do better. Still, there are a lot of great startups with solo founders so it can be done. I think it is very important that you don't signal an attitude of I know it all and don't need anyone else. Solo Founder or not Startups are NEVER built by one person.
Valuation for SaaS company software developed and working. Monthly subscription in Safety/ HR space - North America, UK, Australia and Middle East
Thanks really depends on growth, probably anything from 10 to 50 times ARR annual recurring revenue.
@@RawStartup growth has been organic up 30% from last year.
Need that seed capital to push into marketing
I have a high (projected) reoccurrence and growth. Potential in the $B’s. Can we get on a phone call?
Wishing you the best of luck!
Hey! I’m the process of finding an app developer. I have already met up with one. We’re going to be spending around $25k to make this app. I have done a prototype and some studies. I feel like I have to learn about more stuff before I head and start making the app. Is there anything else I have to be solid on before hiring a company to make my app. I know down the road I have to find marketing etc are these stuff I’m supposed to have done before or after making the app. Any suggestions, and tips before I head to start making the app. Thanks!!!
I think you have to learn the process of building an app. Be very close to the process and be aware that you're never done building, if is not a a one of thing and need to be ready for that.
Many Revenue stage tech startup uses 100x Revenue.
What you think about it?
Nope that just isn't true anymore. I know about cases like that, but that was 1-2 years ago, it just doesn't happen right now. It was probably too much back then, we're back to some sort of normal again.
@@RawStartup Thanks for reply, curious about...
What you think now whats the number instead of 100?
So my startup's worth $40 million.. is it good or bad?
Hi, I am a partner in the IT service company with 50% equity. I am planning to leave the firm because of financial issues which may affect the company, but it can be solved by hiring a good manager at the same salary I was getting. I am supposed to be getting paid 75k a month but I have taken only 425000 in 11 months. I have also invested 300000 into the business. So all in all, I've been paid 12500. It's been 11 months and revenue is around 3million and profit would be 300000 so far because of assets and other expenses. The salary paid every month is around 200000 and assets are of around 300000. How do I calculate the valuation and how much should I be paid. The sales person is my partner and we don't have new projects lined up but it shouldn't be an issue to keep getting new projects and my partner is still investing in hiring more team members. Can you please help?
Sorry, this is just too specific for me to help out with.
@@RawStartup What?
You don't have any questions, you just look at other videos and write like crazy... Thanks ...
Thanks!
How do I do this valuation if it's a professional football league?
Ok Interesting, I would look at how mature the business is. Use one of the 3 methods depending on whether there is revenue and profit or maybe none of them. So all depends on how mature it is. All that said sports and teams are special sometimes the value is set all on passion and nothing else. That is a different thing.
@@RawStartup The business is non-existent to me, because I don't know how to find founding at this time! I'm new to business. I know these teams will be beloved in their cities! Would I need to do a competitive analysis?
Sir, please would you act as my mentor?
Looking forward to hear from you
Thanks, keep watching my videos, that is my way of mentoring you!
like like like 👍
Thanks for liking
Wrong bloody question. You mean how much value to others am i providing and how do i monetise the business?
Any company ever $1 billion on day 1?
That is a great question, I have not heard about it, but it could happen
ChatGPT mightve been
Dear M. Heini, this is a top Excellent presentation of the 3 valuation methods for the 3 distinct phases of a typical startup business growth stage = extensively insightful !!!! Was looking for a valuation method for 2 companies, one is a potential disrupter in the energy space, and the other 1 in the telecom infrastructure on the African continent. Both have not yet started operations, so no revenue and no earnings. Thank you very much Sir. I should require additional assistance soon to invest as an angel investor in both endeavors and would be thankful to contact you for consultancy services, as your explanations are very grounded and practical, extracted from real life experience vs some consultants that are very and too much academic and encouraging me to google to finds multiples for these 2 not yet born businesses in next equity funding for their respective capex .. thank you again, kind regards, Joel
Thank you very much, I'm very glad that the video was helpful