Every startup essentially plans for seeking funds to have a glitch-free business journey. Fundraising help in shaping an effective business model, accelerating growth, and creating a business that disrupts conventional market scenarios. In today’s world of business, the success and sustainability of a startup are determined by the amount of funding it has acquired.
When a startup founder is not able to pool in the desired funds from internal sources, external avenues such as seed investors, VCs, and incubators come into the picture. However, approaching them is not a cakewalk and requires a thorough financial valuation process. If a company is making profits, valuation becomes comprehensible. But in the case of a startup, financial valuation is intrinsically different, and understanding it in detail is imperative.
What Is A Startup Valuation?
Startup valuation is simply quantifying the worth of a company with the use of qualitative attributes. Unlike the scenario of a profitable business, it is not dependent on calculating annual profits, revenues, and cash flows. An investor goes through an extensive financial study and certain market projections that are the primary contributors in the process of a startup valuation.
When there is close to no revenue or profits, a startup places a