Startup Valuation Methods

Definition

The range of techniques used to estimate the equity value of early-stage companies with limited financial history, including the venture capital method, the Berkus method, the scorecard method, comparable company analysis, and discounted cash flow with scenario analysis. Given the inherent uncertainty, startup valuations are as much a negotiated outcome as an analytical result, with investors applying risk-adjusted return requirements to expected exit values to derive current implied valuations.