Putting a Value on a New Venture
| August 14, 2008 |  View for printing |
How to perform a back-of-the-envelope valuation of a business that's still relatively unproven
Sure, there are generally accepted ways to determine what an established private company is worth (BusinessWeek SmallBiz, 4/16/08). But for a relatively unproven venture, the process is really more art than science (some may even think it's magic or voodoo, or just plain craziness). To be sure, it's best to have a potential investor suggest a valuation and negotiate from there. To get a sense of how potential investors arrive at a valuation (and how to do one yourself), there's no need to learn Excel or crank out discounted cash-flow models. Instead, understand the following basic rules of thumb.
by Tom Taulli
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