A key focus on start-up valuations is understanding the business story. What is the potential total market value for the industry and what percentage of the market can the business realistically expect to achieve? How long will it take to become profitable? What is the growth curve?
Often start-up valuations are required to raise capital and so the question is more about what price can we expect an investor to buy in at. Price is a function of supply and demand, mood, momentum, and appetite in the market. Key start-up valuation issues become what price have shareholders invested at before, what is the appetite for investment, are there comparable investments.
Start-ups valuation engagements have included the valuation and financial modeling for a start-up Airbnb style company related to the commercial property market; valuation required for capital raising and the valuation and pricing advice in relation to a health product startup with the products manufactured under license and distribution primarily in Asia.