The mystery of startup valuations has existed since the day 1st startup was born! This topic is fundamental, emotional, scientific and artistic at the same time. I have been asked this question often, and in different forms like "What is my idea worth?", "How can I get 10 crores funding, but retain control of my company?". The answer depends on the person who answers the question. Entrepreneurs like to increase the number as much as possible while not annoying the investor, and investors like to peg it to as low as possible, while keeping the entrepreneur interested and motivated. I will try to demystify the mystery below.
For starters, valuation is the number which shows how much the company can be sold off completely for. Typically, if 10% of shares are issued for 1 crore, then company valuation is 10 crore – pre-money is 9 crore and post-money is 10 crore. One of the ways to arrive at a valuation number is try 4 – 5 methods and take an average.
To read the full, original article click on this link: Unplugging the Mystery of Startup Valuations
Author: Amit Grover
