A lot of startup valuation relies on guesswork and estimation, meaning that there is no single, universally accepted analytical methodology for investors. The use of such valuation methods is dependent upon the stage of a business (e.g. phase/earnings/revenue), and the corresponding data points available in the market and/or industry the startup operates in (acquisition multiples etc.).
Valuations are more an art than a science, especially for early-stage companies where there is little revenue or financial data to apply multiples on.
When we have to determine a valuation at Volta Ventures there are several things we take into consideration:
- The market and our experience on what we feel is a valid multiple
- The multiples for other businesses in the same vertical
- The market multiples for exits in the space
- Comparable deal sizes
- Comparable teams
