The main question that will arise before you when looking for financing for your own company is should you go for Start-up Valuation Services. The answer to this question is based on the cost of a start-up itself.
The point is that some people develop and make money- based on project estimates. Since you spend most of your time assessing situations that may or may not arise, the bulk of this time itself is spent on guesswork.
Start-up Valuation Services involves an assessment that plays an important role in the lives of entrepreneurs. After all, such an assessment establishes the share of the company, which they will have to give to the investor for money.
At the initial stage of its development, the value of a company is almost 0. Why does it happen? Let us take an example. (Read More: Why Should You Trust Your Chartered Accountant?)
You are looking for an investment of Rs. 100,000 in exchange for 10% of the company. Then, with the most ordinary transaction, the preliminary estimate of the start-up for you will be Rs. 1 Lakh. But this does not mean that the value of the company in each time is Rs. 1 Lakh. Most likely, you will not be able to sell the company for that amount. However, such a valuation testifies to the main potential of the company.
The main thing that is important for an investor is the sales volume in your company for the next few years. The more successful your company is, the greater the investor’s income will be in the future. That is why the assessment of the value of a start-up at the initial stage is important, however, it is much more important how the owner of the company will behave to increase his start-up capital in the future.
Valuation of the start-up: how should we go about it?
The task of valuing a start-up is not easy since it has no history, and its future evolves in uncertain spheres. However, this does not mean that investors should be given the free field to give it an approximate value without defending it, or on the contrary, to overvalue it to hope to fall to an acceptable value.
Win-win valuation
Above all, it should be borne in mind that, in principle, private investors do not pursue the objective of controlling the start-up (except in cases of absolute necessity). We must therefore favour a win-win partnership, in which the founder and the investors neither feel at a disadvantage.
Realistically valuing the start-up at its fair value helps ensure the good profitability of the business. Indeed, between the creation of the start-up and its sale, several fundraising events can take place. It is, therefore, necessary to bet on several rounds of the table and to
favour a reasonable valuation at the beginning.
It will always be possible thereafter to redo the next round of table by focusing on exceeding the objectives of the business plan, for example, or by negotiating stock warrants.
So, if you have a start-up company and want to know its value, it would be helpful for you to take consultation from Start-up Valuation Service providers.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by
CS Neetu Saini
AKGVG & Associates