Originally written by Matthew Cushen on Small Business
A start-up valuation is an area of business where entrepreneurs are least confident.
This is not unusual. Valuing a business is the area where new entrepreneurs, and many an experienced one, are least assured. It seems like a black art, with its own language and with few rules.
As an example, yesterday I was chatting to an entrepreneur who’d had a stellar career in large business, had a very different view on a (large and growing) market, and from that had innovated a very interesting proposition. She was, quite rightly, super confident — until I asked what valuation she hoped to place on the business when raising some equity funding. The conviction evaporated. After some circling around the question she mumbled a number, with no rationale other than some sense it might be what other businesses had raised at. Only one thing was clear — we’d both thought her number was incredible (both astonishing and unbelievable).
Starting at the very basics, here is a starting off point when thinking about a start-up’s valuation, highlighting the important language and an example:

Valuing a start-up is only vaguely related to valuing an established business. A mature business will usually

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