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3

Forecasting exit value of startup?

Forecasting is obviously inaccurate, but how would you model a portfolio with "realistic" exit valuations?  Could startup's current deck provide any usable inputs for such model? E.g. market size, market CAGR, team experience etc? Obviously when founders say their ambition is just 100-500M$ exit, that tells something. But what else and how to factor in the assumptions?

Top answer:

Start with fund models from Foresight https://foresight.is/venture-fund-model-annual/ Exit potential from pre-seed and seed is more art than science. You're looking for team and product potential to scale dramatically to dominate (or cre...

2

Is a DCF (Discounted Cash Flows) method generally being used to calculate a startup valuation?

Since DCF method uses historical data to predict future cash flows of the company, this usually does not fit a startup since we have very little to no data on the cashflows. It is better to look for some benchmarks to tell valuation of a startup since it shows how others priced the companies in a given market/ geography/ setup. 

Top answer:

Startup valuations are typically set by the market of investors. If there is a high investor demand, the valuation of the startup is typically higher. If there is low investor demand, the valuation of the startup is lower. If there is no...