I was wondering how are valuations of a company determined for a start up and/or up and coming company?
the reason why i ask is, i like to watch sharktank segments once in a while.
and obviously these companies are all currently privately owned.
However, whenever they go on the show looking for investments, the company valuation seems to be done in such a linear fashion. The main (and seems like ONLY) valuation method the sharks use is simply investment * equity.
so if someone is asking for a 100k for 10% equity in the company, the sharks simply see it as them saying their company is worth $1MM.
and yes, i get that. its true asking for a 100k for 10% equity is the same thing as saying their company is worth $1MM. but what i DONT get is that it seems like thats the only metric everyone on the show is using. any other argument the person seeking investment uses is denied by the sharks. (i.e. growth potential, current market shares, sales, moat, etc)
Is this correct that that is in fact all that matters for a startup/private company seeking investors?
Submitted June 26, 2021 at 12:40AM by AIONisMINE https://ift.tt/3h2MCsu
