A start up valuation helps quantify a company net worth and while it is complex it can be done incrementally. Calculating your valuations is important as it is the entrepreneur’s starting point in seeking to raise capital. In this brief blog, which is mostly directed at entrepreneurs, I focus on three aspects that can be leveraged to increase your company valuation.
Multiple Valuation Accelerator 1: Scarcity
“Scarcity” means that your company owns or does something that others don’t or can’t do. This means that your company produces something that is scarce or in the best-case scenario and that you are one of the few entrepreneurs offering such type of service. Here are more details
- Unique tech advantage aiming to analyze and monetize data collection
- Legally defendable intellectual property (like patents, copyright, or trade secrets)
- A wide moat keeping competition from entering your market
- One of the few companies in the sector to have over 50% women staff and be women led and founded company
Multiple Valuation Accelerator: Market size growth
Being in the right segment of the economy means a lot to investors and lenders, as it shows that the leadership team has captured what is broken in the marketplace, devising an effective way to solve this problem. Here following are additional details to consider:
- The size of the market a company operates is incredibly important for investors and donors as they understand that financial and societal returns are going to be high
- What’s even more important, though, is market size growth
- Of all the things you can control as a founder, growth is by far the most effective way to boost your valuation. Nothing is more convincing to an investor than a company that is growing fast.
Multiple Accelerator 3: Perceived value of a company
This is one of the most important valuation boosters in my view. There is real company value, and there is perceived value. The valuations of internet companies between 1998 and 2000 were driven up almost entirely by Fear of Missing Out
- The perception of value is probably the biggest factor I have been talking about in my blogs and articles, and it reflects the price of a company. It can take a company valuation from nothing to billions. This is where we are working a lot right now with many entrepreneurs.
- The useful lesson to take from this is that founders who know how to attract media attention and shape their companies’ reputations, can drastically increase their companies’ valuations.
- Understand how to attract media attention early on by organizing outreach campaigns, roundtable etc.
- Understand how to control the narrative around your brand proactively, rather than reactively.
- Use social media wisely to increase the perceived value of your business. Establishing a platform to engage and provide content to your “stakeholders” is extremely important
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