Methods to Value a Startup

Value a Startup pic
Value a Startup
Image: entrepreneur.com

Arthur “Art” J. Samberg is a successful investment professional with the experience of growing a $3 million dollar fund into a complex fund which had over $17 billion in managed assets in the year 2000. A graduate of MIT, Stanford and Columbia Business School, Art Samberg currently operates his family office, Hawkes Financial LLC, in New York, where he applies his investment expertise primarily in technology based start-ups.

A startup is generally defined as a small company that has recently been founded by a single individual or a small group. Startups often provide a service or product that is unique and new to the market, but tend to operate at a loss and require financing as they spend resources on expanding and testing ideas. Investors can utilize several methods to value a startup given these factors.

Cost to duplicate approach – assesses value through expenses incurred and the value of physical assets.

Market multiple approach – estimates value based on the sale of similar organizations, if possible.

Discounted cash flow approach – estimates value based on an expected future cash flow.

Development stage approach – assigns value based on the likelihood of a startup’s path to profitability.

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