You'll hear about a lot of ways to value your startup. Discounted cash flow. ,ROI, and 409A valuations are some of the methodologies you'll find with some simple research.
However, there's one and only one way to determine the value of your startup. And if you guessed none of the above, then, you're right. I'll tell you the answer in this short video. I hope you like it.
Read The Video Transcript Below:
Let me ask you a question. Would you profess to tell LeBron James how to play basketball? Would you? Good, I didn't think so.
Well then let me ask you this question. Why would you profess to tell a professional investor how to value your company? Don't do it. There are preventable mistakes when you meet with VCs, and, right at the top of the list, is telling an investor how to value your company.
Who has more experience here, you or the investor on how to value businesses? The obvious answer is the investor has more experience.
This is what they do every single day of the week. They know how to value your business. So, when you put in any investment document, be it a pitch deck, be it something else that you provide investors, what the value of your businesses is, an ROI analysis or any other crazy analysis you come up with. Boy, you have right smack tattooed, right on your face. You know what you have? Amateur.
You are an amateur when you do that. So just don't do it. You don't need to do that. The better thing, when the question comes up, what is your company worth? Because it's a trick question, is this. "I'll let the market decide." Because guess who the market is? The market is always the investors, not you, the investors.
So, take it from me. Be smart. Don't profess to know everything. Don't profess to show how smart you are about something where you're not LeBron James. The other side is. I'm Brett, at BrettJfox.com. Have a great, great day.